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The Market Risk Premium is expected to be 8% and the risk-free rate is 2%. Investors in this world use CAPM and Gordon Growth Model
The Market Risk Premium is expected to be 8% and the risk-free rate is 2%. Investors in this world use CAPM and Gordon Growth Model and reach equilibrium instantaneously. A company's stock price is $120, it expects to pay a dividend of $10 in the upcoming year and the dividend growth rate is expected to be 4%. Working backwards using this information, find this stock's beta.
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