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1. suppose that your company has paid $3 in dividends per share last year. Financial analysts expects the dividend to grow at 8% for the
1. suppose that your company has paid $3 in dividends per share last year. Financial analysts expects the dividend to grow at 8% for the next two years, and then at a constant growth rate of 5% afterwards, which will be forever. what is the value of the stock of the company now assuming your required rate of return is 12%?
a. $35.60
b. $78.66
c. $50.54
d. $47.54
2. Calculate the required rate of return of the stock, assuming that the stock's beta is 4.0 yield on three month US Treasury bill is 3%, and the expected rate of change in the S&P index is 10%.
a. 13.9%
b. 15.5%
c. 22%
d. 31%
3. Market risk could be diversified away through either random diversification or efficient diversification.
True or False?
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