Question

Question 16 (1 point) The economy has been in a recession, but seems to be recovering. Ebeling Inc.'s stock just paid a dividend of $3.1. The company's dividend is expected to grow at a ra te of -0.01 this year, 0.04, next year, and 0.05 for every year after that. If Ebeling has a required rate of return of 0.14, what is the current value of Ebeling's the stock? Your Answer:

:Answer Question 17 (1 point) In most cases actively managed mutual funds under perform index funds such as the Whilshire 5000, but someone with inside information can significantly out perform an index fund. These facts are consistent with which of the following statements. Question 17 options:

The strong form Efficient Market Hypotheses is True

The weak form Efficient Market Hypotheses is True

The semi-strong form Efficient Market Hypotheses is True

The Efficient Market Hypotheses is False in all forms

Answer 1

question 16:

the current value of Ebeling's the stock =$32.17

Question 17:
Answer: The semi-strong form Efficient Market Hypotheses is True.

They are 3 levels of Market efficiency:
1. Strong efficiency: Insider information, fundamental analysis and technical analysis are unless in such a market.
2. Semi- Strong: fundamental analysis and technical analysis are unless in such a market. *"ONLY" insider information is useful.*
3. Weak: technical analysis is unless in such a market.

divident qust paid (Do) = $3.1 D, - 3.1 1-01 - 3.131 D2 - Dix 1.045 3.256 D3 - D2 x 1.05= 3-149 present value of stock at year2 (PV2) PN2 = D3 Ree Required Rate of Peteren = 3.149 I go growth rate Re-g 0.14-0.05 = $34.99 price of stock = (Pro) present value of all tuture cash flows Di & Iz Citre) (itre) Citre) Citre) ² 3.131 + 3-256, 34.99 (1.14) - C1-14)2 + (1-1432 I Pro = $32.17