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Suppose the risk-free return is 6%, the market risk premium 8% and Stock A has a beta of 1.5. Suppose CAPM holds, find Stock
Suppose the risk-free return is 6%, the market risk premium 8% and Stock A has a beta of 1.5. Suppose CAPM holds, find Stock A's expected rate of return (i.e. find stock A's required rate of return, E,(A) CAPM = TE ) If Stock A has the expected dividend of $3.15, growth rate of 5%, and the current share price is $26.25. What is the return rate (E.(A)) based on these facts?
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Fundamentals of Investments, Valuation and Management
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
8th edition
1259720697, 1259720691, 1260109437, 9781260109436, 978-1259720697
