Question
Klutz Sports (KS) recently paid a $1.20 per share dividend, which is expected to grow at a constant rate equal to 4 percent forever. KSs
Klutz Sports (KS) recently paid a $1.20 per share dividend, which is expected to grow at a constant rate equal to 4 percent forever. KSs stock has a beta coefficient equal to 0.8 and its current market price is $17.83 per share. Currently, the risk-free rate of return is 2.5 percent and the market risk premium is 10 percent. Is KSs stock correctly priced? Explain.
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Analysis for Financial Management
Authors: Robert C. Higgins
12th edition
1259918963, 9781260140729 , 978-1259918964
