Memories of the 2007-2009 financial crisis have made you more risk averse, doubling the risk premium...

Memories of the 2007-2009 financial crisis have made you more risk averse, doubling the risk premium you require to purchase a stock. Suppose that your risk premium before the crisis was 4 percent and that you had been willing to pay $412 for a stock with a dividend payment of $10 and expected dividend growth of 3 percent.

Using the dividend discount model, with unchanged risk-free rate, dividend payment and expected dividend growth, what price would you now be willing to pay for this stock?

Instructions: Enter your response rounded to the nearest dollar.

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jeff jeffy answered 1 year ago

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Memories of the 2007-2009 financial crisis have made you more risk averse, doubling the risk premium...

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