1 What is the difference between the expected return and the required return? When should the two returns be equal?
2 What is the difference between the value of a stock and its price? When should they be equal? 3 What variables affect the value of a stock according to the dividend-growth model? What role do earnings play in this model? 4 How do interest rates and risk affect a stock’s price in the Capital Asset Pricing Model? 5 The efficient market hypothesis suggests that it is difficult to outperform the market on a consistent basis Are there possible exceptions to the hypothesis that concern the valuation of common stock?