Alpha Geek

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  • bachelor in business administration
    Polytechnic State University Sanluis
    Jan-2006 - Nov-2010

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    Polytechnic State University
    Jan-2012 - Nov-2016

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    Harvard Square Academy (HS2)
    Mar-2012 - Present

Category > Business & Finance Posted 06 Aug 2017 My Price 5.00

Suppose the risk-free rate of return is 3.5 percent and the market risk premium is 7 percent.

Suppose the risk-free rate of return is 3.5 percent and the market risk premium is 7 percent. Stock U, which has a beta coefficient equal to 0.9, is currently selling for $28 per share. The company is expected to grow at a 4 percent rate forever, and the most recent dividend paid to stockholders was $1.75 per share. Is Stock U correctly priced? Explain.

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Answers

Alpha Geek
(8)
Status NEW Posted 06 Aug 2017 12:08 PM My Price 5.00

Ris-----------k-f-----------ree----------- ra-----------te -----------of -----------ret-----------urn-----------, R-----------f =----------- 3.-----------5% -----------Mar-----------ket----------- ri-----------sk -----------pre-----------miu-----------m, -----------Rm------------Rf -----------= 7-----------% B-----------eta-----------, B----------- = -----------0.9----------- Cu-----------rre-----------ntl-----------y s-----------ell-----------ing----------- pr-----------ice-----------, P-----------o =----------- $2-----------8 E-----------xpe-----------cte-----------d g-----------row-----------th -----------rat-----------e =----------- 4%----------- Mo-----------st -----------rec-----------ent-----------

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