Use the Information for the Question(s)below

question 66

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 Bernard is closest to:

• A)+5%.
• B)-2%.
• C)-3%.
• D)+2%.

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Definitions:

Hard Workers

Individuals who consistently exert a great deal of effort in their tasks and responsibilities, often going above and beyond what is expected.

Indolent Workers

Employees who show a lack of activity or effort in their duties, often avoiding tasks or doing them slowly.

Gender Gap

The differences in opinions, attitudes, behaviors, or attributes between men and women.

Women of Color

Refers to women who are not of white European descent and are often discussed in contexts concerning social, political, and economic inequalities.