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1) The risk free rate is 6 percent, and the rate of return on the market portfolio is 11 percent. A firm is considering buying
1) The risk free rate is 6 percent, and the rate of return on the market portfolio is 11 percent. A firm is considering buying a company whose shares have an equity beta of 1.2. If these shares currently pay a $4.00 dividend and these dividends grow at a constant rate of 2 percent, what would be a fair price for each share?
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