ECON quiz

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Question 11 pts

Let Rt be the yield on debt at time t, ex Dt+1 be the expected dividend payment and ex Pt+1 be the expected price of the stock at time t+1, and Pt is the current price of the stock. Then Rt = (ex Dt+1 + ex Pt+1 – Pt)/Pt is

Flag this QuestionQuestion 21 pts

If the interest rate is rising and stock prices are simultaneously rising, then according to the fundamental theory of stock pricing

Flag this QuestionQuestion 31 pts

Consider the stable growth or steady state model of a stock price. If the price of the stock is $40 per share, the yield on the relevant bond is 6%, and the growth rate of dividends is expect to be 4%, then the current dividend growth rate will be (do not use a $, so 1.13, not $1.13)

Flag this QuestionQuestion 41 pts

Suppose everyone believes that an increase in the unemployment rate will lower dividend payments in the future. Suppose a week from tomorrow when the BLS announces the unemployment rate for March, it announces an increase, but stock prices do not change. Then this is evidence that

Flag this QuestionQuestion 51 pts

Assume the fundamental value theory of stock pricing holds. If you are a rational investor, and you own shares of Cintas stock, then

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