Financial Management - Study Mode
[#521] An efficient market hypothesis states in which all public or private information is reflected in current market prices is classified as
Correct Answer
(D) strong form efficiency
Explanation
Solution: An efficient market hypothesis states in which all public or private information is reflected in current market prices is classified as strong form efficiency. Strong-form efficiency is a component of the random walk theory and states that market and securities prices are not random and are influenced by past events. Strong-form efficiency is the opposite of weak form efficiency.
[#522] An expected dividend yield is added into expected growth rate to calculate
Correct Answer
(B) expected rate of return
Explanation
Solution: An expected dividend yield is added into expected growth rate to calculate expected rate of return. The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR).
[#523] Dividend yield is 25% and current price is Rs 40 then dividend yield will be
Correct Answer
(B) Rs 10.00
Explanation
Solution: Dividend yield = Current price * Dividend yield percentage = Rs. 40 * 25% = Rs. 10.00
[#524] Paid dividend with dividend yield 25% is Rs 5 then cost price would be
Correct Answer
(D) Rs 20.00
Explanation
Solution: Cost price = Dividend paid / Dividend yield percentage = Rs. 5 / 25% = Rs. 20.00
[#525] An expected final stock price is Rs 45 and an original investment is Rs 25 then an expected capital gain will be
Correct Answer
(D) Rs 20.00
Explanation
Solution: Expected capital gain = Expected final stock price - Original investment = Rs. 45 - Rs. 25 = Rs. 20.00