Which of the following statements is most accurate in analyzing a stock? If the expected return exceeds its required return__________________ a. The stock should be sold. b. The stock is good to buy. c. The management is probably not trying to maximize the price per share. d. Dividends are not likely to be declared e. The stock is experiencing supernormal growth
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Which of the following statements is most accurate in analyzing a stock? If the expected return exceeds its
required return__________________
a. The stock should be sold.
b. The stock is good to buy.
c. The management is probably not trying to maximize the price per share.
d. Dividends are not likely to be declared
e. The stock is experiencing supernormal growth
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