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The Abby stock pays a dividend in the amount of $5.78 25 The growth rate of dividends is a constant 6.25% 26 The current stock
The Abby stock pays a dividend in the amount of | $5.78 | ||
25 | The growth rate of dividends is a constant | 6.25% | |
26 | The current stock price is | $31.00 | |
27 | The prevailing Treasury bill rate is | 2.70% | |
28 | The average return on the S&P 500 Index is | 13.00% | |
29 | The Abby Corp. is involved in wildcat drilling for oil in the midwest. | ||
30 | The stock carries a beta of | 2.0 | |
31 | What is the Expected Rate of Return? | ||
32 | What is the Required Rate of Return? |
a. | Expected Rate of Return = 36.06% Required Rate of Return = 33.09%
| |
b. | Expected Rate of Return = 25.06% Required Rate of Return = 25.09%
| |
c. | Expected Rate of Return = 46.06% Required Rate of Return = 43.09%
| |
d. | Expected Rate of Return = 26.06% Required Rate of Return = 23.09% |
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