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FB has a beta of 1.3, DE has a beta of 0.8, and IBM has a beta of 118. The market risk premium is 8.5%
FB has a beta of 1.3, DE has a beta of 0.8, and IBM has a beta of 118. The market risk premium is 8.5% and the risk-free rate is 3.3%. You estimated that FB's stock price will grow to $155 a share next year, from the current level of $115 a share. DE's stock price will be $190 next year, where it is $178 currently, IBM will be at $145 next year, where it is $123 currently. FB will not pay dividends, and DE will pay $3.4 in dividends next year, while IBM will pay $5.8 in dividends.
Should you buy/short either of these stocks?
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