Question
XYZ stock is expected to be priced at $47.38 in 1 year. It is expected to pay its next dividend, which is expected to be
XYZ stock is expected to be priced at $47.38 in 1 year. It is expected to pay its next dividend, which is expected to be $1.61, in 1 year. The stock has a beta of 0.87. The market has an expected return of 14.96%, the risk-free rate is 4.37%, and the inflation rate is 2.74%. What is the current price of XYZ stock?
| a. | $43.13 (plus or minus $0.10) | |
| b. | $44.86 (plus or minus $0.10) | |
| c. | $41.73 (plus or minus $0.10) | |
| d. | $44.30 (plus or minus $0.10) | |
| e. | None of the above is within $0.10 of the correct answer |
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Foundations Of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
17th Edition
126001391X, 978-1260013917
