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A share of stock with a beta of .65 now sells for $46. Investors expect the stock to pay a year-end dividend of $2. The
A share of stock with a beta of .65 now sells for $46. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 6%, and the market risk premium is 9%. a. Suppose investors believe the stock will sell for $48 at year-end. Is the stock a good or bad buy? What will investors do? The stock is a buy and the investors . b. At what price will the stock reach an equilibrium at which it is perceived as fairly priced today? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price $
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