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The probability distribution for Rm the coming year is as follows: Probability Market Return (Rm) 5% 7% 30% 8% 30% 9% 30% 10% 5% 12%
The probability distribution for Rm the coming year is as follows:
Probability | Market Return (Rm) |
5% | 7% |
30% | 8% |
30% | 9% |
30% | 10% |
5% | 12% |
If RRF = 6.05% and Stock X has a beta of 2.0, an expected constant growth rate of 7 percent, and D0 = $2, what market price gives the investor a return consistent with the stock's risk?
$25.00 | ||
$37.50 | ||
$21.72 | ||
$42.38 | ||
$56.94 |
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