Answer Happy

QUESTION 25 The Beta of United Technologies is 1.5. Currently, the risk-free rate of interest is 2.7% and your boss has told you that a suitable market risk premium is 5%. According to the Capital Asset Pricing Model, what should be the required rate of return? (don't include the percent sign in your answer, i.e. write 8% as 8). QUESTION 26 Which statement is correct? When a firm announces a seasoned equity offering, markets generally interpret this as a negative signal that management believes the firm is overvalued. The stock price drops as a result of this interpretation. When a firm announces a seasoned equity offering, markets generally interpret this as a positive signal that management believes the firm is undervalued. The stock price decreases as a result of this interpretation. O When a firm announces a seasoned equity offering, markets generally pret this as a negative signal that management believes the firm is overvalued. The stock price increases as a result of this interpretation. O When a firm announces a seasoned equity offering, markets generally interpret this as a positive signal that management believes the firm is undervalued. The stock price increases as a result of this interpretation.