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The current price of stock W (Z) is $144.50 ($210.00) Analysts expect that in one year a dividend of $5.60 ($4.80) will be paid
The current price of stock W (Z) is $144.50 ($210.00) Analysts expect that in one year a dividend of $5.60 ($4.80) will be paid on stock W (Z). In addition, analysts expect the price of stock W (Z) in one year to be $161.30 ($237.75). Stock W (Z) has a beta of 1.10 (1.50). The risk-free rate is 3.5% and the market risk premium is 8.0% 4 pts a. Given the required return from CAPM, what current stock price for W would we expect? b. What is the alpha for Z?
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answer a Expected Price for Stock W using CAPM We can use the Capital Asset Pricing Model CAPM to estimate the expected price of Stock W based on the ...
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Fundamentals of Financial Accounting
Authors: Fred Phillips, Robert Libby, Patricia Libby
5th edition
78025915, 978-1259115400, 1259115402, 978-0078025914
