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The risk-free rate of return is 4 percent, and the expected return on the market is 7.8 percent. Stock A has a beta coefficient of

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The risk-free rate of return is 4 percent, and the expected return on the market is 7.8 percent. Stock A has a beta coefficient of 1.6, an earnings and dividend growth rate of 3 percent, and a current dividend of $1.50 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 $45.00, what should you do? The stock -Select- be purchased. c. If the expected return on the market rises to 11.4 percent and the other variables remain constant, what will be the value of the stock? $ d. If the risk-free return rises to 5.5 percent and the return on the market rises to 12 percent, what will be the value of the stock? $ e. If the beta coefficient falls to 1.4 and the other variables remain constant, what will be the value of the stock? $ f. Explain why the stock's value changes in c through e. The increase in the return on the market -Select- the required return and [ -Select- the value of the stock. The increase in the risk-free rate and the simultaneous increase in the return on the market cause the value of the stock to -Select- The decrease in the beta coefficient causes the firm to become -Select- risky as measured by beta, which -Select- the value of the stock

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