Question
1.A security has a beta of 0.8; the riskless rate is 4%, and the expected market risk premium is 6% per year.The dividend for this
1.A security has a beta of 0.8; the riskless rate is 4%, and the expected market risk premium is 6% per year.The dividend for this security next year is anticipated to be $2.00 per share; the dividend is expected to grow at 3% in perpetuity.The stock is currently trading at $38 a share.
a.If the CAPM is true, is the security in equilibrium?
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Management Science The Art Of Modeling With Spreadsheets
Authors: Stephen G. Powell, Kenneth R. Baker
3rd Edition
0470530677, 978-0470530672
