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There are five investors in the stock market. The following table shows their names and the rates of return they require from the stock of
There are five investors in the stock market. The following table shows their names and the rates of return they require from the stock of the XYZ corporation. Currently the price of the stock is currently Po = $210. The stock has currently paid a dividend of $20 and the investors expect dividends to grow at a constant rate of 5 percent per year. They already own this stock. Which one of these investors is/are most likely to do nothing (neither buy additional shares nor sell some of what already owned)? Investor Required Rate of Return Abe Barbara Carolyn David Emily 0.05 0.25 0.15 0.08 0.20 Abe only Barbara only Carolyn only David only Emily only Abe and Carolyn Abe and David Abe, Carolyn, and David Barbara, Carolyn, and Emily Barbara and Emily
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