Use the Information for the Question(s)below

question 56

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 alpha for Chihuahua is closest to:

• A)+2%.
• B)-5%.
• C)-3%.
• D)+3%.

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Definitions:

Stonewalling

A communication strategy in which one party refuses to engage or respond, effectively shutting down dialogue.

Contempt

A feeling of disdain or scorn towards someone or something, often considered a mix of anger and disgust, viewed as a negative emotional reaction.

EVLN Model

A framework describing four ways employees respond to dissatisfaction at work: Exit, Voice, Loyalty, and Neglect.

Loneliness

The feeling that one is deprived of human social connections.