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1) XYZ corp expects to earn $4.9 per share next year and plow back 48.98% of its earnings (i.e., it expects to pay out a
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XYZ corp expects to earn $4.9 per share next year and plow back 48.98% of its earnings (i.e., it expects to pay out a dividend of $2.5 per share, representing 51.02% of its earnings). The dividends are expected to grow at a constant sustainable growth rate and the stocks are currently priced at $30 per share. How much of the stock's $30 price is reflected in Present Value of Growth Opportunities (PVGO) if the investors' required rate of return is 20%? The weak form of the efficient market hypothesis implies that: No one can achieve abnormal returns using market information. Insiders, such as specialists and corporate board members, cannot achieve abnormal returns on average. Investors cannot achieve abnormal returns, on average, using technical analysis, after adjusting for transaction costs and taxes. All of above. OStep by Step Solution
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