AFB, Inc and DAS, Inc both paid a $2 per share dividend last year. This year, AFB, Inc announces
an increase to $3 per share while DAS, Inc announces an increase to $2.50 per share.
After the
announcement, the price of DAS, Inc stock increases and the price of AFB, Inc's stock decreases.
Which of the following best explains this situation?
A) Capital markets are perfect.
B) The stock market is irrational.
C) AFB, Inc. had higher agency costs than DAS, Inc. prior to the announcement.
D) Both companies need to raise capital for positive NPV projects, and flotation costs are high.
D
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Standard costs are realistically predetermined costs of direct materials, direct labor, and overhead that usually are expressed as a cost per unit
Indicate whether the statement is true or false
Answer the following statement(s) true (T) or false (F)
1. Legal corporate social responsibility focuses on profitability and doing what is right, just, and fair. 2. Providing ethical leadership and avoiding questionable practices mean doing more than is required in dealing with market stakeholders, such as treating employees right and paying them fair wages. 3. Benevolent corporate social responsibility focuses on profitability and helping society through philanthropy. 4. Benevolent corporate social responsibility is the lowest level of corporate social responsibility. 5. In organizations practicing benevolent corporate social responsibility, employees are expected, encouraged, and rewarded for being active volunteers in the community, often on company time.
A stock has a beta of 1.8. The expected market return is 10.5%. The equilibrium return for the stock is 17.30%. What is the risk-free rate according to the CAPM?
A) 1% B) 2% C) 3% D) 4% E) 5%
The difficulty with underlying assumptions is ______.
A. expressing them in a concrete way B. gaining consensus on what they are C. you cannot see them D. all of the above