If a given investor believes that a stock’s expected return exceeds its required return, then the investor most likely believes that the stock is not a good buy. True or False
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If a given investor believes that a stock’s expected return exceeds its required return, then the investor most likely believes that the stock is not a good buy.
True
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False
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- which of the following statements is true? Select one: Investors sell a stock when required return is less than expected return and buy a stock when required return above expected return None of the answers are correct Investors buy a stock when it is under-valued and sell it when it is over-valued Investors sell a stock when it is under-valued and buy it when it is over-valued.If an investor believes that the expected return is lower than the required rate of the return, the stock should be and he should . Group of answer choices overvalued, buy the stock. undervalued, not buy the stock overvalued, not buy the stock undervalued, buy the stock.If the fair value of a stock is more than its market value, which of the following is a reasonable conclusion? a. The stock has a low level of risk b. The stock offers a high dividend payout ratio c. The market is undervaluing the stock d. The market is overvaluing the stock
- Since investors tend to dislike risk and like certainty, the more volatile a stock, the less valuable will be an option to purchase the stock, other things held constant. Group of answer choices True FalseIf you want to buy a particular stock but are worried thatdemand from investors could push the price to an unreasonably high level before yourorder is executed, what type of order would you specify? Why?The buyer of a call option on stock benefits if the underlying stock price rises or if the volatility of the stock's price increases. Select one: True False
- If an investor can earn abnormal returns based on insider trading, the stock market is at best Multiple Choice inefficient. weak form efficient. semistrong form efficient. strong form efficient.You buy a stock from the capital market. If the capital market is semi-strong efficient, which of the following statements is NOT correct? a. You cannot earn any abnormal returns above the required return by trading on public information. b. Past stock prices can be used to predict future stock prices. c. The technical analysis of publicly available information will not lead to any abnormal returns. d. The stock is fairly priced. e. Stock prices reflect all publicly available information.Your professor finds a stock-trading rule that generates excess risk-adjusted returns. Instead of publishing the results, she keeps the trading rule to herself. This is most closely associated with A. insider trading. B. regret avoidance. C. selection bias. D. framing.
- If the expected rate of return on a stock is less than its required rate of return, investors will desire to ________ the stock Choose answer rise sell buy decline There will also be a tendency for the stock's price to _________. rise sell buy declinef a stock's expected return as seen by the marginal investor exceeds his or her required return, then the investor will buy the stock until its price has risen enough to bring the expected return down to equal the required return. O False O True Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Which of the following statement(s) is(are) TRUE? (i) The valuation price of a stock primarily depends on expected future dividends to its shareholders and its required rate of return. (ii) An investor who intends to sell a stock after holding it for a short period will forgo all future dividends, thus will be willing to pay for a lower price for the stock compared to another investor who prefers to hold the share for a longer period. (iii) The valuation share price is positively related to the share's required rate of return.
