Author Question: Robert invested in stock and received a positive return over a 9-month period. Which of the ... (Read 51 times)

jho37

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Robert invested in stock and received a positive return over a 9-month period. Which of the following types of returns will be greater?
 
  A) Holding period return (HPR)
  B) Effective annual return
  C) Annual percentage rate
  D) There is not enough information to make a definitive choice.

Question 2

Rancid Fruit Co. just paid a dividend of 1.00 and expects to increase it at a rate of 5 annually. All else equal, under which of the following conditions would its stock price fall in one year?
 
  A) If the dividend in one year exceeds 1.05
  B) If the required return falls
  C) If the growth rate increases
  D) If its PE ratio increases
  E) If its dividend in one year is less than 1.05



Edwyer

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Answer to Question 1

Answer: B
Explanation: B) The holding period return is for only nine months. The other choices are forms of annual returns and will be greater than the HPR if the HPR is positive.

Answer to Question 2

E



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