Problem 11-06 The risk-free rate of return is 4 percent, and the expected return on the market is 8.5 percent. Stock A has a beta coefficient of 1.6, an earnings and dividend growth rate of 5 percent, and a current dividend of $3.30 a share. Do not round Intermediate calculations, Round your answers to the nearest cent. a. What should be the market price of the stock? $ b. If the current market price of the stock is $37.00, what should you do? The stock Select be purchased c. If the expected return on the market rises to 14,6 percent and the other variables remain constant, what will be the value of the stock $ d. If the risk-free return rises to 7 percent and the return on the market rises to 15.4 percent, what will be the value of the stock $ e. If the beta coefficient falls to 1.3 and the other variables remain constant what will be the value of the stock? 5 f. Explain why the stock's value changes in through e. The increase in the return on the market-Select- the required return and select the value of the stock The Increase in the risk-free rate and the simultaneous increase in the return on the market cause the value of the stock to see The decrease in the beta coefficient causes the firm to become risky as measured by beta, which relect the value of the stock eBook Problem 11-06 The risk-free rate of return is 4 percent, and the expected return on the market is 8.5 percent. Stock A has a beta coefficient of 1.6, an earnings and di- rate of 5 percent, and a current dividend of $3.30 a share. Do not round intermediate calculations, Round your answers to the nearest cent. a. What should be the market price of the stock? $ b. If the current market price of the stock is $37.00, what should you do? The stock -Select be purchased. c. If the should m on the market rises to 14.6 percent and the other variables remain constant, what will be the value of the stock? Select should not $ d. If the risk-free return rises to 7 percent and the return on the market rises to 15.4 percent, what will be the value of the stock? $ e. If the beta coefficient falls to 1.3 and the other variables remain constant, what will be the value of the stock? $ f. Explain why the stock's value changes in c through e. The increase in the return on the market -Select- the required return and select the value of the stock the smiltaneous Increase in the return on the market cause the value of the stock to Select b. If the current market price of the stock is $37.00, what should you do? The stock Select be purchased. c. If the expected return on the market rises to 14.6 percent and the other variables remain constant, what will be the value of the stock d. If the risk-free return rises to 7 percent and the return on the market rises to 15.4 percent, what will be the value of the stock $ e. If the beta coefficient falls to 1.3 and the other variables remain constant, what will be the value of the stock? the value of the stock f. Explain why the stock's value changes in c through e. The increase in the return on the market -Select the required return and -Select- The increase in the risk-free rate and the increases s increase in the return on the market cause the value of the stock to -Selectv The decrease in the beta coefficient causes the firm to become -Select-v] risky as measured by beta, which Select Select decreases the value of the stock, Grade it Now Save & Continue 0 - Stock Valuation Sear he risk-free rate of return is 4 percent, and the expected return on the market is 8.5 percent. Stock A has a beta ceffident of 1.6, an earnings and dividi ate of 5 percent, and a current dividend of $3.30 a share. Do not round intermediate calculations, Round your answers to the nearest cent. a. What should be the market price of the stock? b. If the current market price of the stock is $37.00, what should you do? The stock -Select- be purchased. c. If the expected return on the market rises to 14.6 percent and the other variables remain constant, what will be the value of the stock? $ d. If the risk-free return rises to 7 percent and the return on the market rises to 15.4 percent, what will be the value of the stock? e. If the beta coefficient falls to 1.3 and the other variables remain constant, what will be the value of the stock? f. Explain why the stock's value changes in c through e. The increase in the return on the market -Select the required return and Seled the value of the stock. 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If the risk-free return rises to 7 percent and the return on the market rises to 15.4 percent, what will be the value of the stock? $ e. If the beta coefficient falls to 1.3 and the other variables remain constant, what will be the value of the stock? $ 7. Explain why the stock's value changes in c through e. The increase in the return on the market -Select the required return and -Select the value of the stock. The increase in the risk-free rate and the simultaneous increase in the return on the market cause the value of the stock to -Select- The decrease in the beta coefficient causes the firm to become Self .v risky as measured by beta, which -Select- the value of the stock -Select lass more COLULRT Et cent. of the stock is $37.00, what should you do? Chased. e market rises to 14.6 percent and the other variables remain constant, what will be the value of the stock? 07 percent and the return on the market rises to 15.4 percent, what will be the value of the stock? 1.3 and the other variables remain constant, what will be the value of the stock? changes in c through e. market Select the required return and -Select- the value of the stock. and the simultaneous increase in the return on the market cause the value of the stock to Select the value of the stock. ent causes the firm to become Select risky as measured by beta, whichi -Select- Select: increases decreases