A stock with a beta of 0.7 currently priced at $50 is expected to increase in price to $55 by year-end and pay a $1 dividend. The expected market return is 15%, and the risk-free rate is 8%. The stock
A. overpriced,so do not buy it.
B. underpriced,so buy it.
C. Properly priced,so buy it.
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Which of the following would most likely lead to an increase in a typical firms capital investment for the current period?
A need to increase inventory.
B. An increase in the firms expected marginal tax rate.
C. A decrease in the market value of the firms debt.
In determining the appropriate asset allocation for a clients investment account, the manager should:
A. Consider only the investors risk tolerance.
B. Incorporate forecasts of future economic conditions.
Consider the investors risk tolerance and future needs,but not forecasts of market conditions.
A top-down security analysis begins by:
Analyzing a firms business prospects and quality of management.
B. Identifying the most attractive companies within each industry.
C. Examining economic conditions.
In a defined contribution pension plan:
A. The employee accepts the investment risk.
B. The plan sponsor promises a predetermined retirement income to participants.
C. The plan manager attempts to match the funds assets to its liabilities.