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:

Creativity

Creativity involves the use of imagination or original ideas to create something; it is a fundamental process in innovation.

Manifest Conflict

The visible and explicit display of disagreement, competition, or antagonism between individuals or groups.

Expressed Openly

The act of sharing thoughts, feelings, or opinions in a straightforward and uninhibited manner.

Functional Conflict

Functional conflict is a healthy, constructive disagreement between two or more individuals or groups that leads to improved decision-making or outcomes.