1. Stock X lies below the Security Market Line and Stock Y lies above Security Market Line. Which of the following is true?
a. You would not want to buy Stock X.
b. You are indifferent to buying Stock Y.
c. The market is not in equilibrium.
d. More than one of the answers are correct.
e. None of the answers are correct.
2. Anthony's Appliances pays a constant quarterly dividend of $.35 per share. How much are you willing to pay for one share if you require a 9 percent rate of return?
A. $3.89
B. $7.78
C. $11.67
D. $15.56
E. $19.44