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Consider two firms, TD and LK , that are each expected to pay the same $ 3 . 2 million dividend every year in perpetuity.
Consider two firms, TD and LK that are each expected to pay the same $ million dividend every year in perpetuity. TD Corporation is riskier and has a cost of capital of LK is not as shaky as TD so LK has a cost of capital of only Assume that the market portfolio is not efficient. Both stocks have the same beta and CAPM would assign them both an expected return of The alpha for TD Corporation is closest to:
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