Question
Antigone Inc. paid out a dividend of $1.75, and analysts expect it to grow at 6% for the foreseeable future. The market rate is 17%,
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Antigone Inc. paid out a dividend of $1.75, and analysts expect it to grow at 6% for the foreseeable future. The market rate is 17%, the T-Bill rate is quoted at 4%, and Antigone stock is selling at $15.50 (beta 1.2). Answer the following questions:
Antigone Inc. paid out a dividend of $1.75, and analysts expect it to grow at 6% for the foreseeable future. The market rate is 17%, the T-Bill rate is quoted at 4%, and Antigone stock is selling at $15.50 (beta 1.2). Answer the following questions:
a) What is the expected return on Antigone stock?
b) Are Antigone shares overpriced, underpriced, or correctly priced?
c) Is Antigone stock above, below, or on the SML?
d) What is the equilibrium price of Antigone stock?
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Finance For Executives Managing For Value Creation
Authors: Gabriel Hawawini, Claude Viallet
3rd Edition
0324274319, 9780324274318
