Question
TPHB, Inc. is expected to pay a $5.25 dividend next year and to have a dividend growth rate of 5%. The firms beta is 1.50,
TPHB, Inc. is expected to pay a $5.25 dividend next year and to have a dividend growth rate of 5%. The firms beta is 1.50, the expected return on the market is 12% and the T-bill rate is 4%. 4 pts a. Suppose TPHBs current stock price is $44.40 is the stock overvalued or undervalued? b. What is TPHBs alpha?
(SHOW ALL CALCULATIONS, NO EXCEL FUNCTIONS)
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Financial Risk Manager Handbook
Authors: Philippe Jorion
6th Edition
0470904011, 978-0470904015
