QUESTION 35 "You believe that Omega stock which has a beta of 2 will return 10.0% this coming year. The market is expected to return and Tbils return 24. According to CAPM which one of these statements is correct given this Information The stock is currently underpriced The stock plots below the security marketine The risk premium on the stock is too low given the stocks beta The stock frs on the security market line QUESTION 36 Company ABC forecasts to have a earning per share of 58 next year the company distributes all its earnings to shareholders as dividends, it will provide investors with a 10% expected retum. Instead company ABC decides to plowback 35% of the earnings at the firm's current retum on equity of 20% What is the value of the stock before and after the plowback decision? 3 (121) THE.E Path QUESTION 37 Which of the following is a cal budgeting decision? Deciding whether or not the firm should go public Should the firm shut down an unprofitable factory! Repurchasing shares of common stock Should the femissue preferred stock or common stock