Question

the required 13. An underpriced stock provides an expected return that is return based on the capital asset pricing model (CAPM). A. Less than B. Equal to C. Greater than D. Greater than or equal to E. None of the above 14. The constant-growth dividend discount model (DDM) can be used only when the A. Growth rate is less than or equal to the required return B. Growth rate is greater than or equal to the required return C. Growth rate is less than the required return D. Growth rate is greater than the required return E. None of the above 15. Suppose that in 2012 the expected dividends of the stocks in a broad market index equaled $240 million when the discount rate was 8% and the expected growth rate of the dividends equaled 6%. Using the constant-growth formula for valuation, if interest rates increase to 9%, the value of the market will change by A. -10% B. -20% C. -25% D. -33% E. None of the above would increase a firm's 16. Assuming all other factors remain unchanged, price-earnings ratio. A. An increase in the dividend payout ratio B. A reduction in investor risk aversion C. An expected increase in the level of inflation D. An increase in the yield on Treasury Bills E. None of the above

questions 13-16 please

Answer 1

Answer : 13) Correct Option is C. greater than .

Reason :

Underpriced Stock has expected return that is greater than return calculated as per CAPM.Therefore an underpriced stock provides exected return taht greater than the required return based on Capital asset pricing model (CAPM).

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