Multiple Choice
Quick Start Inc. is expected to pay a dividend of $1.05 next year and dividends are expected to continue their 7% annual growth rate. The SML has been estimated as follows:
Kj = 0.08 + 0.064βj
Assuming Quick Start has a beta of 1.1, what would happen to its stock price if inflation expectations went from the current 5% to 8%?
A) It would decrease $8.14.
B) It would decrease $3.55.
C) It would decrease $3.18.
D) The stock price will not change.
Correct Answer:
Verified
Correct Answer:
Verified
Q71: On the capital market line (CML), any
Q72: Which of the following statements regarding risk
Q73: Common stockholders require a higher rate of
Q74: The term structure of interest rates is
Q75: In general, when the correlation coefficient between
Q77: The business risk of a firm refers
Q78: Sally's broker told her that the expected
Q79: Which of the following would be considered
Q80: Beta is defined as _.<br>A) a measure
Q81: If the return on U.S. Treasury bills