Question
The market price of a security is $50. Its expected rate of return is 10%. The risk-free rate is 5%, and the market risk premium
The market price of a security is $50. Its expected rate of return is 10%. The risk-free rate is 5%, and the market risk premium is 8%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity.(Round your answer to 2 decimal places.)
Market price$
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Analysis for Financial Management
Authors: Robert C. Higgins
12th edition
1259918963, 9781260140729 , 978-1259918964
