Given the Data Below for the Zoom Corporation,you Should

question 170

Multiple Choice

Given the data below for the Zoom Corporation,you should
1.Beta = 0.8
2.Expected price appreciation = 15%
3.Market risk premium = 8%
4.Risk free rate = 4%
5.Next year's dividend = $1.00
6.Current market price = $50

• A)buy the stock: expected return exceeds required return.
• B)not buy the stock: required return exceeds expected return.
• C)buy the stock: required return exceeds expected return.
• D)not buy the stock: expected return exceeds required return.

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Definitions:

Comparative Advantage

The ability of an individual or country to produce a good or service at a lower opportunity cost than others, leading to more efficient international trade.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision.

Domestic Opportunity Cost

The cost of forgoing the next best alternative use of a country's own resources.