Question
The impact of COVID-19 on financial markets has made you more risk-averse because you reason that in today's globalized world, it's only a matter of
The impact of COVID-19 on financial markets has made you more risk-averse because you reason that in today's globalized world, it's only a matter of time before another pandemic erupts. This triples the risk premium you require to purchase a stock. Suppose that your risk premium before the Coronavirus (COVID-19) crisis was 3% and that you had been willing to pay $440 for a stock with a dividend payment of $8 and expected dividend growth of 2 percent. Using the dividend discount model, with unchanged risk-free rate, dividend payment and expected dividend growth, what price (rounded to the nearest dollar) would you now be willing to pay for this stock? Please round to a whole number and only enter the number (no $ sign).
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