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Jersey Jewel Mining has a beta coefficient of 1.3. Currently the risk-free rate is 3 percent and the anticipated return on the market is 7
Jersey Jewel Mining has a beta coefficient of 1.3. Currently the risk-free rate is 3 percent and the anticipated return on the market is 7 percent. JJM pays a $3.80 dividend that is growing at 5 percent annually. Do not round intermediate calculations. a. What is the required return for JJM? Round your answer to two decimal places. % b. Given the required return, what is the value of the stock? Round your answer to the nearest cent. $ c. If the stock is selling for $158, what should you do? The stock -Select-overvalued and -Select- be purchased. d. If the beta coefficient declines to 1.0, what is the new value of the stock? Round your answer to the nearest cent. $ e. If the price remains $158, what course of action should you take given the valuation in d? The stock is -Select- and -Select- be purchased
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