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The fundamental value (today) of one share in Company A is 20. Company A pays an annual dividend of 2 per share forever. The first
The fundamental value (today) of one share in Company A is 20. Company A pays an annual dividend of 2 per share forever. The first dividend is received in exactly one year. Assume that the risk-free rate of return is 0 and that the variance of the market portfolio is constant. What would the fundamental present value of the one share be, if the covariance between the market and the share doubles?
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