Jersey Jewel Mining has a beta coefficient of 1. Currently the risk-free rate is 4 percent and
Question:
Jersey Jewel Mining has a beta coefficient of 1. Currently the risk-free rate is 4 percent and the anticipated return on the market is 6 percent. JJM pays a $3.70 dividend that is growing at 3 percent annually. Do not round intermediate calculations.
What is the required return for JJM? Round your answer to two decimal places.
( answer in % )
Given the required return, what is the value of the stock? Round your answer to the nearest cent.
( answer in $)
If the stock is selling for $159, what should you do?
The stock( is / is not ) overvalued and( should / should not ) be purchased.
If the beta coefficient declines to 0.7, what is the new value of the stock? Round your answer to the nearest cent.
( answer in $)
If the price remains $159, what course of action should you take given the valuation ind?
The stock is(overvalued/undervalued)and(should/should not)be purchased.