1. (A) The risk-free rate is 2.91% and the market risk premium is 5.39%. A stock...

1. (A) The risk-free rate is 2.91% and the market risk premium is 5.39%. A stock with a β of 1.48 will have an expected return of ____%. (B) The risk-free rate is 2.05% and the expected return on the market 7.67%. A stock with a β of 1.57 will have an expected return of ____%. (C) A stock has an expected return of 14.00%. The risk-free rate is 3.12% and the market risk premium is 7.68%. What is the β of the stock?

2. The risk-free rate is 3.88% and the market risk premium is 6.36%. A stock with a β of 1.27 just paid a dividend of $2.07. The dividend is expected to grow at 24.16% for three years and then grow at 4.49% forever. What is the value of the stock?

Expert Solution

jeff jeffy answered 1 year ago

1. The risk-free rate is 1.86% and the market risk premium is 9.85%. A stock with...

1. The risk-free rate is 1.86% and the market risk premium is 9.85%. A stock with a β of 1.71 just paid a dividend of $2.79. The dividend is expected to grow at 24.28% for three years and then grow at 4.36% forever. What is the value of the stock? 2. The risk-free rate is 2.20% and the market risk premium is 6.49%. A stock with a β of 1.27 just paid a dividend of $2.31. The dividend is expected...

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The risk-free rate is 2.37% and the market risk premium is 6.39%. A stock with a β of 1.60 just paid a dividend of $2.67. The dividend is expected to grow at 21.99% for three years and then grow at 3.53% forever. What is the value of the stock? The answer is $48.21 but not sure how to get that answer. Please show the finance calculator steps if possible and not excel! Thanks

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