A stock has a negative beta and does not pay dividends. Given this information, a model that is valid for calculating a required return for this stock is the  A. Constant Dividend Growth Model (DCF) B. Capital Asset Pricing Model (CAPM) C. Internal Rate of Return Model (IRR) D. Weighted Average Cost of Capital Model (WACC)

Baghiben

Suppose we observe from market data that, for a given non-dividend paying stock, F, ± Soer. What might explain the inequality in this relationship (i.e. why don't we observe Fo = Soe"T) if markets are efficient? Hint: try to identify real-world market frictions that might cause cases where Fo + Soe™" does not result in arbitrage opportunities

H3. Which of the following statements are true assuming that all assets satisfy CAPM? a) Low-beta stocks always have lower return standard deviation than high beta stocks. b) All the assets have the same expected return. c) Two assets with different beta can have same expected returns. d) Assets cannot earn expected returns above the CAPM-implied expected return.   Please explain the correct answers and why the other ones are incorrect  Explain with details

Remember the following the 1-factor model or CAPM is defined as re-rf beta * [rm -rf] what is the return on equity (re) if rf = 0.05 rm = 1.88 beta = 1.47

Assume a firm has a beta of 1.2. All else held constant, the cost of equity for this firm will increase if the:  A.beta decreases. B.decreases as the beta of the firm's stock increases C.either the risk-free rate or the market rate of return decreases. D.must equal the market rate of return

Bhagi

In the Gordon Growth (dividend discount) Model, the growth rate is assumed to be the required return on equity. a. proportional to O b. Blank O c. equal to O d. greater than O e. less than

for your explaination on the second one, i think you mean the answer is B. as you stated it will result into decrease of expected return if stock

Apart from using PE ratio, what is another way of valuing the stock price? if we have the EPS, Share Price, Dividend Per Share, ROE and the discount rate (R).  And what are the assumptions and the limitations of this model? What can be said about the dividend growth model? Similarly what can be said about the capital asset pricing model?