Question about Stock Valuations
1) An increase in a firms expected growth rate would normally cause the firms required rate of return to
a. Increase.
b. Decrease.
c. Fluctuate.
d. Remain constant.
e. Possibly increase, possibly decrease, or possibly remain unchanged.
2) Which of the following statements is most correct?
a. One of the advantages of common stock financing is that a greater proportion of stock in the capital structure can reduce the risk of a takeover bid.
b. A firm with classified stock can pay different dividends to each class of shares.
c. One of the advantages of common stock financing is that a firm?s debt ratio will decrease.
d. Statements b and c are correct.
e. All of the statements above are correct