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Suppose you are considering buying a stock. The stock is currently trading for $298. You expect the price in one year to be $301 and
Suppose you are considering buying a stock. The stock is currently trading for $298. You expect the price in one year to be $301 and it will pay a dividend of $4. You estimate the stocks beta at 1.2, the risk-free rate at 3%, and the expected return on the market at 9%. According to the CAPM, what is the maximum price you should be willing to pay for this stock? LO3
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