Reference no: EM133205042

Required: Please answer ALL questions below

a. What does an efficient market imply for stock prices? In your answer, make sure that you define efficient markets AND identify the implication for stock prices when markets are deemed efficient

b. Researchers have shown that the best measure of risk of a security in a large portfolio is the beta (B) of the security, which is captured in the Capital Asset Pricing Model (CAPM). In your own words, briefly define Beta AND interpret what a security's Beta of one (1.00) relative to the market implies

c. When a firm announces a dividend cut, it provides signals to investors. Briefly explain one possible positive signal AND one possible negative signal that the firm gives when it cuts its dividend.