If the Expected Rate of Return on a Stock Exceeds

question 8

Multiple Choice

If the expected rate of return on a stock exceeds the required rate, it means that _____

• A)the stock is experiencing an abnormal growth pattern.
• B)the stock should be sold.
• C)the company is not trying to maximize the price per share.
• D)the stock is a good buy.
• E)the dividends are not declared.

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Definitions:

Promoter

An individual or entity that takes the initiative in founding and organizing a business or enterprise, often before it’s officially established.

Sole Shareholder

An individual or entity that owns 100% of the shares of a corporation, maintaining complete control.

Corporate Assets

Resources or items of value owned by a corporation, including cash, property, and intellectual property, contributing to its overall worth.

Personal Liability

refers to the legal responsibility that individuals have to pay their debts from their own assets.