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1. The common stock of ISPO is expected to pay a dividend of $10. If the stock is currently selling for $55 and the growth
1. The common stock of ISPO is expected to pay a dividend of $10. If the stock is currently selling for $55 and the growth rate in dividends is expected to be 2%, what is the expected return of this stock?
2. You recently calculated the expected return for a stock to be 14%. If the stock has a required return of 10%, should you buy or not buy (sell) this stock?
| Buy because it is undervalued | ||
| Buy because it is overvalued | ||
| Sell because it is undervalued | ||
| Sell because it is overvalued |
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