Under the Following Conditions, What Are the Expected Returns for Stocks

question 108

Multiple Choice

Under the following conditions, what are the expected returns for stocks X and Y?

• A) 11.58 percent and 12.8 percent
• B) 15.65 percent and 18.23 percent
• C) 13.27 percent and 15.6 percent
• D) 18.2 percent and 16.45 percent
• E) 22.35 percent and 13.25 percent

---

Definitions:

Discount Rate

During discounted cash flow analysis, this is the rate employed to determine the present value of anticipated future cash flows.

Cash Flows

The total amount of money being transferred into and out of a business, often used as an indicator of a company's financial strength.

Discount Rate

The discount rate employed in discounted cash flow analysis to ascertain the present worth of future cash flows.

Annual Salary

The total amount of money that an employee earns in a year from their employer for their services.