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As an investor you have a required rate of return of 1 2 percent for investments in risky stocks. You have analyzed three risky firms
As an investor you have a required rate of return of percent for investments in risky stocks. You have analyzed three risky firms and must decide which if any to purchase. Your information is
Firm
A
B
C
Current
dividends
$$$
Expected annual growth
rate in dividends
Current market
price
$$$
a What is your valuation of each stock using the dividendgrowth model? Which if any should you buy?
b If you bought Stock A what is your implie rate of return?
c If your required rate of return were percent, what should be the price necessary to induce you to buy Stock A
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