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14. Sure Tool Company is expected to pay a dividend of $2 in the upcoming year. The risk-free rate of return is 4% and the
14. Sure Tool Company is expected to pay a dividend of $2 in the upcoming year. The risk-free
rate of return is 4% and the expected return on the market portfolio is 14%. Analysts expect the
price of Sure Tool Company shares to be $22 a year from now. The beta of Sure Tool Company's
stock is 1.25.
The market's required rate of return on Sure's stock is ____.
A. 14.0%
B. 17.5%
C. 16.5%
D. 15.25%
E. None of these is correct
15. If Sure's intrinsic value is $21.00 today, what must be its growth rate?
A. 0.0%
B. 10%
C. 4%
D. 6%
E. 7%
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