J. Harper Inc.'s stock has a 50% chance of producing a 35% return, a 30% chance of producing a 10% return, and a 20% chance of producing a-28% return. What it Harper's expected return? 14.16% 14.53% 14.90% 15.27% 15.65% Rosenberg Inc. is considering a capital budgeting project that has an expected return of 20% and a standard deviation of 25%. What is the project's coefficient of variation? 1.25 1.31 1.38 1.45 0.80 Keith Johnson has $100,000 invested in a 2-stock portfolio. $30,000 is invested in Potts Manufacturing and the remainder is invested in Stohs Corporation. Potts' beta is 1.60 and Stohs' beta is 0.60. What is the portfolio's beta? 0.60 0.66 0.74 0.82 0.90 Tate currently pays a dividend (D_0) of $2.86 with the growth in dividends expected to remain constant at 5%. The required rate of return K_c is 10%. Calculate P_0. $30 $45 $60 $57 The Isberg Company jus paid a dividend of $8.80 per share, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.25, the marked risk premium is 5.00%, and the risk-free rate is 4.00%. What is the company's current stock price? $19.95 $20.45 $20.96 $21.49 $22.02 Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds? Market interest rates rise sharply. Market interest rates decline sharply. The company's financial situation deteriorates significantly. Inflation increases significantly. The company's bonds are downgraded. According to the nonconstant growth model discussed in the textbook, the discount rate used to find the present value of the expected cash flows during the initial growth period is the same as the discount rate used to find the PVs of cash flows during the subsequent constant growth period. (True; False) Which of the following statements is CORRECT? The constant growth model takes into consideration the capital gates inventors expect to earn on a stock. Two firms with the same expected dividend and growth rates must also have the same stock price. It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant. If a stock has a reared rate of return r_n = 12%, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%. The price of a stock it the present value of all expected future dividends, discounted at the dividend growth rate. Which of the following statements is CORRECT? Preferred stockholders have a priority over bondholders in the event of bankruptcy to the income, but not to the proceeds in a liquidation. The preferred stock of a given firm is generally less risky lo inaction than the same firm's common stock. Corporations cannot buy the preferred stocks of other corporations. Preferred dividends are not generally cumulative. A big advantage of preferred stock is that dividends on preferred stocks are tax deductible by the issuing corporation