Consider the following stocks, all of which will pay a liquidating dividend in a year and nothing

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Consider the following stocks, all of which will pay a liquidating dividend in a year and nothing in the interim:

Market Capitalization

($ million)

Expected Liquidating Dividend ($ million) Beta Stock A 800 1000 0.77 Stock B 750 1000 1.46 Stock C 950 1000 1.25 Stock D 900 1000 1.07

a. Calculate the expected return of each stock.

b. What is the sign of correlation between the expected return and market capitalization of the stocks?

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Corporate Finance

ISBN: 9781292304151

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Jun 16, 2024 04:28 AM

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Consider the following stocks, all of which will pay a liquidating dividend in a year and nothing

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Corporate Finance

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