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Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 5 0 0 will sell at year
Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P will sell at yearend at a price of $ The stock will pay a dividend at yearend of $ Assume that riskfree Treasury securities currently offer an interest rate of
Average rates of return on Treasury bills, government bonds, and common stocks, figures in percent per year are as follows.
Portfolio Average Annual Rate of Return Average Premium Extra return versus Treasury bills
Treasury bills
Treasury bonds
Common stocks
What is the discount rate on the stock?
Note: Enter your answer as a percent rounded to decimal places.
What price should she be willing to pay for the stock today?
Note: Do not round intermediate calculations. Round your answer to decimal places.
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