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#27 A stock is priced today at $12.69. Analysts have a consensus view that the stock will be valued at $16.06 next year. The stock
#27
A stock is priced today at $12.69. Analysts have a consensus view that the stock will be valued at $16.06 next year. The stock will not pay a dividend in the coming year. After a little research, you know that the stock has a beta of 1.11. The risk free rate in the economy is 5.00%, while the market risk premium is 6.00%.
If CAPM and the analysts are correct, what price SHOULD the stock be trading at TODAY?
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