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The risk - free rate of return is 2 percent, and the expected return on the market is 8 . 5 percent. Stock A has
The riskfree rate of return is percent, and the expected return on the market is percent. Stock A has a beta coefficient of an earnings and dividend growth rate of percent, and a current dividend of $ a share. Do not round intermediate calculations. Round your answers to the nearest cent.
A What should be the market price of the stock? $
B If the current market price of the stock is $ what should you do
The stockshould or should not, select onebe purchased.
CIf the expected return on the market rises to percent and the other variables remain constant, what will be the value of the stock? $
D If the riskfree return rises to percent and the return on the market rises to percent, what will be the value of the stock? $
E If the beta coefficient falls to and the other variables remain constant, what will be the value of the stock? $
F Explain why the stocks value changes incthroughe
The increase in the return on the marketincreases or decreases, select onethe required return and increases or decreases, select onethe value of the stock.The increase in the riskfree rate and the simultaneous increase in the return on the market cause the value of the stock toincrease or decrease, select oneThe decrease in the beta coefficient causes the firm to become less or more, select onerisky as measured by beta, whichincreases or decreases, select onethe value of the stock.
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