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The market price of a security is $40. Its expected rate of return is 13%. The risk-free rate is 7%, and the market risk premium
The market price of a security is $40. Its expected rate of return is 13%. The risk-free rate is 7%, and the market risk premium is 8%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity. |
Please find the market price of security, security expected rate fo return, risk free rate of return, market risk premium, change in beta (x), current security beta, new security beta, current dividend, new expected rate of return on security, and new price of security.
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