A stock currently sells for 2300 and its required rate of


1. There are two stocks you are considering to buy. Stock A and Stock B. Stock A has a beta of 1.4 and Stock B has a beta of 3.6. Treasury bills have a return rate of 7% and the market portfolio has an expected return of 11%. Compared to the less risky stock, the riskier stock has

A) 8.4% higher return

B) 8.3% higher return

C) 8.8 higher return

D) 8.8% lower return

E) 8.3 Lower return

2.  a stock currently sells for $23.00 and its required rate of return is 18%. The dividends are expected to increase at a constant rate of 9% per year. WHat is the expected price of the stock three years from today?

A) $35.15

B) $27.70

C) $24.43

D) $29.79

E) $33.07

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Financial Management: A stock currently sells for 2300 and its required rate of
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