You Consider Buying a Share of Stock at a Price

question 15

Multiple Choice

You consider buying a share of stock at a price of $25. The stock is expected to pay a dividend of $1.50 next year, and your advisory service tells you that you can expect to sell the stock in 1 year for $28. The stock's beta is 1.1, rf is 6%, and E[rm] = 16%. What is the stock's abnormal return?

• A) 1%
• B) 2%
• C) -1%
• D) -2%

---

Definitions:

Facial Expressions

Movements of the facial muscles that convey emotions, intentions, or social information to others.

Gestures

Movement of the body parts, especially hands or head, to express an idea or meaning.

Well-being

A comprehensive term for the overall health, happiness, and prosperity of an individual or community.

Personal Growth

The process of improving oneself through such activities as enhancing employment skills, increasing consciousness, and building wealth.