If in the opinion of a given investor a stock's expected return exceeds its required return,this suggests that the investor thinks
A)the stock is experiencing supernormal growth.
B)the stock should be sold.
C)the stock is a good buy.
D)management is probably not trying to maximize the price per share.
E)dividends are not likely to be declared.

Question

Quizplus · Accepted Answer

If the expected return exceeds the required return, it means that the investor believes the stock will provide higher returns than what is necessary to compensate for the risk taken. Therefore, the stock is seen as undervalued and a good buy.

If in the Opinion of a Given Investor a Stock's