The efficient market hypothesis implies that

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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.)

 

Reference no: EM132033989

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