Two constant growth stocks are in equilibrium, have the same price, and have the same required rate of return. Which of the following statements is CORRECT?
A. The two stocks must have the same dividend per share.
B. If one stock has a higher dividend yield, then it must also have a lower dividend growth rate.
C. If one stock has a higher dividend yield, then it must also have a higher dividend growth rate.
D. The two stocks must have the same dividend growth rate.
E. The two stocks must have the same dividend yield.
Answer: B
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A. The required rate of return will decline for stocks whose betas are less than 1.0. B. The required rate of return on the market, rM, will not change as a result of these changes. C. The required rate of return for each individual stock in the market will increase by an amount equal to the increase in the market risk D. The required rate of return on a riskless bond will decline. E. The required rate of return for an average stock will increase by an amount equal to the increase in the market risk premium.
Given a time period, an interest rate, and a future value, a person could solve for a present value
Indicate whether the statement is true or false.
Total quality management is characterized by a strong orientation toward both external and internal
A) stockholders. B) suppliers. C) customers. D) managers. E) regulators.
_______ bonds represent a novel way of obtaining insurance from capital markets against specified disasters.
A. Asset-backed bonds B. TIPS C. Catastrophe D. Pay-in-kind