1. Which type of risk that is associated with investments can be diversified away under the right conditions?
Systematic risk
Market risk
Inflation risk
Idiosyncratic risk
More than one of these risks can be diversified away.
2. Swanson Company’s long-run constant dividend growth is expected to be 10%. If the required return (rs) for Swanson is 15%, and the most recent dividend paid (D0) was $2.00, what is the most likely stock price one year from now?
$48.40
$40.00
$38.60
$35.00
$29.80