Question
George is a value investor and is considering whether to buy Teltus Ltd. The current market price is $3.60. The share has a beta of
George is a value investor and is considering whether to buy Teltus Ltd. The current market price is $3.60. The share has a beta of 0.8, an expected dividend of $0.40 per share and the growth rate is estimated to be 3%. George uses the Gordon Dividend Discount Model to determine share valuation, assuming a risk-free rate of 2.5% and a risk premium of 4.5%.
Which of the following is correct?
Group of answer choices
D. Not enough information to value the share with this model.
A. George should buy Teltus Ltd.
B. George is indifferent to buying Teltus Ltd.
C. George should not buy Teltus Ltd.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started