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Given the following for XYZ company's common stock: (1) The risk rate is 6%; (2) XYZ's beta is 1.2; (3) the market risk premium is
Given the following for XYZ company's common stock: (1) The risk rate is 6%; (2) XYZ's "beta" is 1.2; (3) the market risk premium is 5%; (4) XYZ's dividend is expected to be $4 during next year; and (5) from a current price of $48 per share, you expect XYZ stock to appreciate to $52 one year from today
A. What is the expected 1 yr. holding period return for stock XYZ
B. What is the "required" rate of return for stock XYZ?
C. What is the intrinsic value of XYZ's stock?
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