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:

Marital Satisfaction

The degree of happiness or fulfillment individuals feel within their marriage or committed relationship.

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The event marking the emergence of a baby from the womb, signifying the beginning of life outside the maternal body.

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The act of maintaining or considering multiple thoughts, emotions, or conditions at the same time.

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The process of promoting and supporting the physical, emotional, social, and intellectual development of a child from infancy to adulthood.