If the Expected Rate of Return on a Stock Exceeds

question 3

Multiple Choice

If the expected rate of return on a stock exceeds the required rate,

• A) The stock is experiencing supernormal growth.
• B) The stock should be sold.
• C) The company is probably not trying to maximize price per share.
• D) The stock is a good buy.
• E) Dividends are not being declared.

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Definitions:

Pressure to Conform

The social force that encourages individuals to adjust their behaviors, beliefs, or actions to align with group norms.

Decision-Making Process

A systematic approach used in determining the best choice from among various alternatives.

Course of Action

A chosen path or strategy intended to accomplish a specific goal.

Decision Making

The process of selecting a course of action from multiple alternatives to achieve a desired outcome.