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Market Equilibrium: Bingo Inc. has a beta of 1.5, a market price of $50, and recently paid a dividend of $2.00 which is expected to
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Market Equilibrium: Bingo Inc. has a beta of 1.5, a market price of $50, and recently paid a dividend of $2.00 which is expected to grow at a constant rate of 5%. The risk-free rate is 2% and the market risk premium is 6%.
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Compute the required rate of return on Bingo stock.
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Compute the expected return on Bingo stock.
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Compute the dividend yield and capital gains yield for Bingos stock.
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Is Bingos stock in equilibrium? If not, then explain what will happen to move
Bingos stock towards equilibrium.
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