Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Oct 07, 2024

You expect the price of Intel stock to be $52.20 next year. The company forecasts to pay a dividend of $2.00 next year. The stock

You expect the price of Intel stock to be $52.20 next year. The company forecasts to pay a dividend of $2.00 next year.

The stock has a beta of 1.1. The risk-free rate is 4% per year, and the return on the market portfolio is 12%. According to the CAPM, what is the fair price of Intel stock?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook On Anti Money Laundering And Combating The Financing Of Terrorism For Nonbank Financial Institutions

Authors: Asian Development Bank

1st Edition

9292577611, 978-9292577612

More Books

Students also viewed these Finance questions

Question

★★★★★

A Klingon spacecraft has a speed of 0.75c with respect to the earth. The Klingons measure 37.0 h for the time interval between two events on the earth. What value for the time interval would they...

Answered: 1 week ago

Question

★★★★★

f(x) = cos(x), c = 0, [-2, 4] calculate the Taylor polynomials P0 , P1 , P2 , P3 , and P4 for the given function centered at the given value of c. Then graph the function and the Taylor polynomials...

Answered: 1 week ago

Question

★★★★★

Explain why frequent spot checks by managers to encourage workers to put forth their best effort may not always be in the best interest of the firms owners.

Answered: 1 week ago

Question

★★★★★

At December 31, 2012, Percheron Inc. had a deferred tax asset of $30,000. At December 31, 2013, the deferred tax asset is $59,000. The corporations 2013 current tax expense is $61,000. What amount...

Answered: 1 week ago

Question

★★★★★

You expect the price of Intel stock to be $52.20 next year. The company forecasts to pay a dividend of $2.00 next year. The stock has a beta of 1.1. The risk-free rate is 4% per year, and the return...

Answered: 1 week ago

Question

★★★★★

Self-Defense Schools, Inc. is authorized to issue 200,000 shares of $2 par common stock. The company issued 70,000 shares at $5 per share. When the market price of common stock was $7 per share,...

Answered: 1 week ago

Question

★★★★★

Maxie and Bianca own Umbrella Corporation, LLC, and they are the top producers of black market Goucher Basketball jerseys. Despite prior team records, these jerseys are in hot demand. Maxie and...

Answered: 1 week ago

Question

★★★★★

RARA Products manufactures three products, R, S, and T, in a joint process. For every ten kilos of raw materials input, the output is five kilos of R, three kilos of S, and two kilos of T. During...

Answered: 1 week ago

Question

★★★★★

Kimberly Young started her own consulting firm, Young Consulting, on May 1, 2022. The trial balance at May 31 is as follows. YOUNG CONSULTING Trial Balance May 31, 2022 Account Number Debit Credit...

Answered: 1 week ago

Question

★★★★★

You've just been assigned as a bookkeeper on an internship at Stonington Badminton Club. The team at Stonington Badminton Club have provided you with the organisational policy and procedures and...

Answered: 1 week ago

Question

★★★★★

Case 5-10 Potential Fraud at EP Sports Richard Lange, CPA, is a sole practitioner. The largest audit client in his office is Echo Park Sportswear (EP Sports). EP Sports is a privately owned company...

Answered: 1 week ago

Previous Question Next Question