1. Angie's just declared a 5 percent (small) stock dividend. Prior to the dividend, the stock had a $1 par value per share, a $15 book value per share and a $20 market value per share. As a result of this dividend, the:
a) common stock account will remain constant.
b) common stock account will decrease in value.
c) retained earnings account will increase in value.
d) capital in excess of par value account will increase in value.
2. Which one of the following is INCORRECT?
A. Expected returns may be defined as the weighted average of possible outcomes by state.
B. The CAPM is not a precise predictor of future expected returns.
C. The risk free return measures the pure time value of money.
D. The weighted average cost of capital shoudl reflect the risk of the firm's assets.
E. The efficient market hypothesis is related to regulatory efficiency.