Question
A stock has a beta of 1.2, the riskless rate is 0.04 and the market premium is 0.1. The stock will return a constant $2
A stock has a beta of 1.2, the riskless rate is 0.04 and the market premium is 0.1. The stock will return a constant $2 as dividend in perpetuity. What is the price of the stock?
Note: Like the riskless rate the market premium is the actual number rather than a %.
Step by Step Solution
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Step: 1
We can use the Gordon Growth Model GGM to estimate the price of the stock Heres how 1 Calculate the ...
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Applied Corporate Finance
Authors: Aswath Damodaran
4th edition
978-1-118-9185, 9781118918562, 1118808932, 1118918568, 978-1118808931
