34. If financial markets were efficient (close to the perfect competition market), at equilibrium:
a) The fundamental value of a stock in this market would equal the present value of its future dividends
b) The price of a financial asset would equal its present value
c) The NPV of an investment in financial assets would equal 0
d) All of the above
35. If financial markets were efficient (close to the perfect competition market). At equilibrium, a investor buying a stock should expect:
a) A Null Net Present Value from the investment.
b) A Null return from the investment.
c) A return from the investment lower than the opportunity cost of capital.
d) All of the above
36. AS Inc. has an issue of preferred stock outstanding that pays $3 dividend every year, in perpetuity If this issue currently sells for $50 per share and financial markets are efficient. At equilibrium:
a) Its expected return is R =D/Po $3/$50
b) The stock can be valued in the long term by discounting its dividends
c) The value of the stock is $50.
d) All of the above. to maintain a constant 5 per cent growth rate
37. BETA Inc. just paid a dividend of $2.5 and pledges in dividends forever. If the required return on the stock is 13% and financial markets are efficient. At equilibrium, the current share price is:
a) Po 2.5 (1+0.05)/0.13
b) Po 2.5 (1+0.05)/(1+0.13)
c) Po 2.5 (1+0.05)/(0.13-0.05)
d) Po 2.5/(0.13-0.05)
Financial Markets Assignment
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