Question 14 1 pts Market risk refers to the tendency of a stock to move with the general stock market. A stock with above-average market risk will tend to be more volatile than the market, and its beta will be greater than 1.0. True False D Question 15 1 pts A portfolio is the variance of returns for one risky asset a group of assets, such as stocks and bonds, held together as a single investment the standard deviation of returns for a collection of risky assets the expected return on a collection of risky assets the expected return on one risky asset Question 16 1 pts Equity with priority for dividends and in the event of liquidation (bankruptcy) is called: Dual class stock Common stock Preferred stock Cumulative stock Deferred stock U Question 17 1 pts Rickrock, Inc. is a great company with an established product line. They have been able to grow their dividend by 3 percent each year for the past 15 years. Analysts estimate that Rickrock will pay a $13.45 dividend next year, and continue to grow their dividends by 3 percent indefinitely. If the required return on Rickrock stock is 18.75 percent, what is the value of their stock? $85.40 $71.73 $97.94 $124.40 Question 18 1 Gigabit Corp has preferred stock that pays a $7.40 per share dividend. Investors estimate that the beta on Gigabit's preferred stock is 0.86. If the risk-free return is 0.012 (1.2%) and the market risk premium is 0.042 (4.2%), use the CAPM to determine the required return on Gigabit preferred stock, and then determine its value. $153.78 $125.80 $195.77 $218.06 $1.54 Question 19 1 pts BAYDEN, Inc. has stock that is expected to pay an $8.48 dividend next year, and the dividend is expected to grow at a constant rate of 3 percent indefinitely. If the stock currently sells for $113 per share, what is the expected return on the stock? 15.0% 6.40% 10.5% 2.50% 9.3% Question 20 1 pts An Force is a struggling manufacturing firm. The company's last dividend was $7.50, but analysts expect that management will reduce the dividend by 5 percent per year, indefinitely. If you require a 13 percent return on this stock, what are you willing to pay for a share today? $89.06 $26.98 $98.44 $39.58 $57.92