in analyzing a stock, find that its expected return exceeds its required returnThis suggests that you think
A) the stock should be sold.
B) the stock is a good buy.
C) management is probably not trying to maximize the price per share.
D) dividends are not likely to be declared.
E) the stock is experiencing supernormal growth.

Question

Quizplus · Accepted Answer

If the expected return of a stock exceeds its required return, that means the stock is undervalued by the market and is likely to have a potential for capital appreciation. Therefore, the stock could be a good buy.

In Analyzing a Stock, Find That Its Expected Return Exceeds