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A common stock currently has a beta of 1.7, the risk-free rate is 7 percent annually, and the market return is 12 percent annually. The
A common stock currently has a beta of 1.7, the risk-free rate is 7 percent annually, and the market return is 12 percent annually. The stock is expected to generate per-share benefits of $6.70 during the coming period. A pending lawsuit has just been dismissed and the beta of the stock drops to 1.4. The new equilibrium price of the stock __________.
A) Will be $47.86
B) Will be $43.24
C) Will be $55.83
D) Cannot be determined from the infromation given
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