Use the Information for the Question(s)below

question 54

Multiple Choice

Use the information for the question(s) below.
Consider two firms,Chihuahua Corporation and Bernard Industries that are each expected to pay the same $1.5 million dividend every year in perpetuity.Chihuahua Corporation is riskier and has an equity cost of capital of 15%.Bernard Industries is not as shaky as Chihuahua,so Bernard has an equity cost of capital of only 10%.Assume that the market portfolio is not efficient.Both stocks have the same beta and an expected return of 12%.
-The market value for Bernard is closest to:

• A)$12.0 million.
• B)$10 million.
• C)$15.0 million.
• D)$12.5 million.

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Definitions:

Gender Conservation

The understanding that a person's gender remains the same even if appearances or roles change, traditionally recognized as part of cognitive development in children.

Sex Differences

Variations in characteristics, behaviors, and physiological processes between males and females, often rooted in biological or genetic distinctions.

Social Stability

The condition in which a society possesses consistent structure and function, maintaining equilibrium amidst changes and challenges.

Evolutionary Theory

A scientific explanation for the diversity of life on Earth, proposing that species change over time through natural selection and adaptation.