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in english: 4. A portion of the stock with a beta of 0.75 is now selling for $ 50. Investors expect the stock to pay
in english: 4. A portion of the stock with a beta of 0.75 is now selling for $ 50. Investors expect the stock to pay a dividend of $ 2 at the end of the year. The Treasury rate is now 4%, and the Market risk premium is 8%. A. If the stock is perceived to be reasonably priced today, what should be the investors' expectation of the share price at the end of the year? B. Suppose investors really believe the stock will sell for $ 54, at the end of the year. Is the stock a good or bad purchase? What will investors do? At what price does the action will come to "equilibrium" in which it is perceived, again, as a price reasonable?
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