Question
Assume the risk-free rate is 8%, the expected rate of return on the market is 18%, and CAPM holds for any individual stocks. A share
Assume the risk-free rate is 8%, the expected rate of return on the market is 18%, and CAPM holds for any individual stocks. A share of stock is now selling for $100. It will pay a dividend of $9 per share at the end of the year. Its beta is 1. What must investors expect the stock to sell for at the end of the year?
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Public Finance
Authors: Harvey S Rosen
6th Edition
0072374055, 978-0072374056
