1. The efficient market hypothesis implies that
-all investments should earn the same average rate of return over time.
-any investment should earn a normal return commensurate with the investment’s risk.
-efficient markets will tend to have fixed prices from one day to the next.
-stock prices are only efficient when all investors review their portfolios on a daily basis.
-investors must be disinterested in their investments for the markets to be efficient.
2. Suppose Universal Forest’s current stock price is $60.00 and it is likely to pay a $0.51 dividend next year. Since analysts estimate Universal Forest will have a 7.8 percent growth rate, what is its required return? (Round your answer to 2 decimal places.)