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I am considering investing in a new start-up firm, Herbs Herbs (HH), that produces legal (at least for now) synthetic and herbal mood enhancers. The
I am considering investing in a new start-up firm, Herbs Herbs (HH), that produces legal (at least for now) synthetic and herbal mood enhancers. The herbs are sold at convenience stores and HH expects growth to be strong. HH stock sells for $72/share and just paid a $4 per share dividend. HH expects revenues, earnings, and dividends to grow at 11% annually. Treasury bills offer a 2% annual rate of return and the market risk-premium is 9%. What is the beta () of HH stock? How much riskier is HH than the market?
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