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Assume you ran a regression of all firms listed on the NYSE and arrived at the following OLS estimates. P/BV=0.88+0.82 payout+7.79 growth-0.41beta +13.81ROE. If a
Assume you ran a regression of all firms listed on the NYSE and arrived at the following OLS estimates. P/BV=0.88+0.82 payout+7.79 growth-0.41beta +13.81ROE.
If a firm has the beta of 1.25, payout ratio of 0.4, ROE of 0.25, and growth rate of 0.15, and BV of equity (on a per share basis of $127). What should be its price per share if it were priced like other NYSE firms?
1) 6.34
2) 1426
3) 675.20
4) 427
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