Question
A stock with a beta of 0.75 is now selling for $50. Investors expect the stock to pay a year-end dividend of $2. The Treasury
A stock with a beta of 0.75 is now selling 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%. to. Suppose investors believe the stock will sell for $52 at the end of the year. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do? (Do not round intermediate calculations. Round the opportunity cost of capital calculation as a whole percentage rounded to 2 decimal places.)
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Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
11th edition
978-1111530266
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