You, in Analyzing a Stock, Find That Its Expected Return

question 26

Multiple Choice

You, in analyzing a stock, find that its expected return exceeds its required return.This suggests that you think

• A) the stock should be sold.
• B) the stock is a good buy.
• C) 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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Definitions:

Bad News

Unfavorable or distressing information that needs to be communicated to someone.

Direct Format

Refers to a straightforward and clear way of presenting information or communication, without unnecessary embellishments or digressions.

Conveying Negative Information

The process of communicating unfavorable news or feedback in a sensitive or tactful manner.

Buffer

A temporary storage area or a means to mitigate the impact of something negative.