If the expected rate of return on a stock exceeds the required rate,
A) The stock is experiencing supernormal growth.
B) The stock should be sold.
C) The company is probably not trying to maximize price per share.
D) The stock is a good buy.
E) Dividends are not being declared.

Question

Quizplus · Accepted Answer

If the expected rate of return on a stock exceeds the required rate, this means that the stock is undervalued and has a potential for price appreciation. Therefore, it is a good buy.

If the Expected Rate of Return on a Stock Exceeds