1. If a stock's beta falls to 50% of its initial level, is it possible? it is said that the expected return will also decrease by . Explain the answer.
2. Two investors evaluated Generac Holdings (GNRC) shares for investment buy. Both agree on the expected value of D1 and also on the level expectations of dividend growth that will be received. Then both of them also agree on the rate of stock risk. The difference is, that the first investor invests his funds for 2 years, meanwhile the second investor invests his funds for 10 years. Both investors paid the same price for GNRC shares. True or is this statement wrong? Explain your answer!

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1 If a stocks beta falls to 50 of its initial level it is indeed possible that the expected return w... View the full answer