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A common share currently has a beta of 1.5, the risk-free rate is 7% annually, and the market return is 12% annually. The share is
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A common share currently has a beta of 1.5, the risk-free rate is 7% annually, and the market return is 12% annually. The share is expected to generate a constant dividend of R6.70 per share. A pending lawsuit has just been dismissed and the beta of the share drops to 1.2. Calculate the new price of the share.
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A) R31.31
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B) R67.00
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C) R51.54
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D) R46.21
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E) Cannot be calculated
A common share currently has a beta of 1.5, the risk-free rate is 7% annually, and the market return is 12% annually. The share is expected to generate a constant dividend of R6.70 per share. A pending lawsuit has just been dismissed and the beta of the share drops to 1.2. Calculate the new price of the share.
-
A) R31.31
-
B) R67.00
-
C) R51.54
-
D) R46.21
-
E) Cannot be calculated
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