Motor Homes Inc (MHI) is presently in a stage of abnormally high ...

[lidoalex]

Motor Homes Inc (MHI) is presently in a stage of abnormally high growth because of a surge in the demand for motor homes.
 
  The company expects earnings and dividends to grow at a rate of 20 for the next 4 years, after which time there will be no growth (g=0 ) in earnings and dividends. The company's last dividend was 1.50. MHI has a beta of 1.6, the return on the market is currently 12.75, and the risk-free rate is 4. What should be the current price per share of common stock?
  A) 15.17
  B) 17.28
  C) 22.21
  D) 19.10
  E) 16.20

Question 2

Strong-form efficient markets theory proclaims that ________.
 
  A) one can chart historical stock prices to predict future stock prices such that you can identify mispriced stocks and routinely outperform the market
  B) one can exploit publicly available news or financial statement information to routinely outperform the market
  C) current prices reflect the price and volume history of the stock, all publicly available information, and all private information
  D) current prices reflect the price and volume history of the stock, all publicly available information, but no private information

[jliusyl]

Answer to Question 1

A

Answer to Question 2

Answer: C
Explanation: C) Strong-form efficient markets theory proclaims that one CANNOT chart historical stock prices to predict future stock prices such that you can identify mispriced stocks and routinely outperform the market. Strong-form efficient markets theory proclaims that one CANNOT exploit publicly available news or financial statement information to routinely outperform the market. Strong-form efficient markets theory proclaims that current prices reflect the price and volume history of the stock, all publicly available information, and ALL private information.