Suppose Two Analysts Are Evaluating a Stock

question 67

Multiple Choice

Suppose two analysts are evaluating a stock. Analyst A assumes that the required return on the stock is higher than the estimate from Analyst B. All other estimates are the same. The price of the stock calculated by Analyst A will be _____ than the price calculated by Analyst

• A) higher
• B) lower
• C) the same
• D) lower only if the stock does not pay a dividend.
• E) higher only if the stock does not pay a dividend.