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Portfolio investment has beta of 1.7 and expected return on market portfolio is 8.5%. The investment has just paid a dividend of $120 per a
Portfolio investment has beta of 1.7 and expected return on market portfolio is 8.5%. The investment has just paid a dividend of $120 per a share. Board of directors of the investment announces that dividend will grow at rate 4% per year for foreseeable future. Rate of risk free rate in the market is 2%. What is the investment's required rate of return? What should be the fair value of each share of the investment portfolio?
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