Which of the following statements is (are) correct?(x)If therisk-free rate is 10 percent and the market risk premium is 4percent, then the required return for the market is 6percent.(y)Suppose the annual return on the S&P 500 Index was8.4 percent. If the annual T-bill yield during the same period was2.7 percent then the market risk premium during that period is 5.7percent.(z)Suppose the annual return on the S&P 500 Index was10.8 percent. If the market risk premium during the same period was6.9 percent then the risk-free rate during that period is 3.9percent.

.(x), (y) and (z)B.(x) and (y) onlyC.(x) and (z) onlyD.(y) and(z) onlyE.(z) only

Samsung recently adjusted the probabilities for its expectedcash flows in light of an Asian currency crisis. It revised theprobability of favorable conditions from 32% to 18% and theprobability of poor earnings from 7% to 17%. Which of the followingis the most likely result from this revision?

A. It would lower its historical return.

B. The probabilities cannot be revised once they have beenestimated.

C. It would have no effect on expected returns.

D. It would raise expected returns.

E. It would lower expected returns

. Which of the following statements is (are) correct?

(x)The stocks of small companies that are priced below $1 pershare are known aspenny stocks.

(y)A stock market bubble occurs when investor enthusiasm causesan inflated bull market that drives prices too high, ending in adramatic collapse in prices.

(z)A price bubble can occur for a single stock.

A.(x), (y) and (z)B.(x) and (y) onlyC.(x) and (z) onlyD.(y) and(z) onlyE.(z) only