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Suppose the risk - free rate of return is 3 . 5 percent and the market risk premium is 8 percent. Stock U , which
Suppose the riskfree rate of return is percent and the market risk premium is percent. Stock which has a beta coefficient equal to is currently selling fo
$ per share. The company is expected to grow at a percent rate forever, and the most recent dividend paid to stockholders was $ per share. Is Stock
correctly priced? Explain. Do not round intermediate calculations. Round your answers to one decimal place.
The required rate of return, that is
is
the expected rate of return, that is
which means that
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