Question
You are considering a stock A that pays a dividend of $1. The beta coefficient of A is 1.3. The risk free return is 6%,
You are considering a stock A that pays a dividend of $1. The beta coefficient of A is 1.3. The risk free return is 6%, while the market average return is 13%.
a.What is the required return for Stock A?
b. If A is selling for $10 a share, is it a good buy if you expect earnings and dividends to grow at 6%?
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
16th Edition
013749601X, 978-0137496013
