Question
You expect the price of IBX stock to be $59.77 per share a year from now. Its current market price is $50, and you expect
You expect the price of IBX stock to be $59.77 per share a year from now. Its current market price is $50, and you expect it to pay a dividend one year from now of $2 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 = 1.15, the risk-free rate is 6% per year, and the expected return on the market portfolio is 14% per year, what is the required rate of return on IBX stock? c) What is the intrinsic value of the IBX stock, and how does it compare to the current market price?
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