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A share of stock with a beta of .75 now sells for $50. Investors expect the stock to pay a year-end dividend of $2. The
A share of stock with a beta of .75 now sells for $50. Investors expect the stock to pay a year-end dividend of $2. The Treasury bill rate is 4%, and the market risk premium is 7%. Suppose investors actually believe the stock will sell for $52 at year-end. Is the stock a good or bad buy? Bad At what point will the stock reach an "equilibrium" at which it again is perceived as fairly priced? (Round your answer to
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