Question
You expect the price of ABC stocks to be $75 per share a year from now. its current market price is $ 60, and you
You expect the price of ABC stocks to be $75 per share a year from now. its current market price is $ 60, and you expect it to pay a dividend one year from now of $ 30.5 per share :
a) what are the stocks expected dividend yield, rate of price appreciation, and expected holding period return?
b) if the stock has a beta of 1.2 the risk free is 5% per year, and the expected rate of return on the market portofio is 15% per year, whar is the required rate of return on ABC stock
c) what is the intrinsic value of ABC stock. and how does it compare to the current market price?
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