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You are interested in a stock that you expect to pay $2.00 next year in dividends (paid at the end of the year). You think
You are interested in a stock that you expect to pay $2.00 next year in dividends (paid at the end of the year). You think you will be able to sell the stock in 1 year for $45. You must pay $41 today for the stock. The risk-free rate of interest is 6% and the market return is 12%. The beta for the stock is 1.3. Based on this data, would you buy the stock? Why or why not?
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