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Thank you in advance! Question 2. Consider the data in the table bolow, which shows the relevant data for the stocks of six firms: GE,
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Question 2. Consider the data in the table bolow, which shows the relevant data for the stocks of six firms: GE, Apple, Bank of America, Exxon, Pfizer, and Home Depot. RF is the risk-free rate and Aps/ps is the growth rate of the stock price. Additionally, the table has the actual market price of each stock (pm) as of September 2016. Use the stock price arbitrage equation to calculate the no-arbitrage price of each stock. Given your answer, should you buy the stock or put the money into a safe asset? Firm Dividend RF Aps/ps PM 4.2 GE 0.38 Apple 2.03 Bank of America 0.2 Exxon 0.75 Pfizer 1.12 Home Depot 1.78 Source: Morningstar, Sept. 1, 2016. 4.2 4.2 4.2 3.18 2.04 3.4 3 1.5 3.01 32.1 106.1 15.9 87.5 35.7 135 4.2 4.2Step by Step Solution
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