Question: The current price of a stock is 20 It is
The current price of a stock is $20. It is expected to rise to $22 in one year and pay an annual dividend of $0.50 during the year. The RF is 5 percent; the ERM is 9 percent, and the stock’s beta is 2.6. Determine whether the stock is overvalued, undervalued, or properly valued. Is the stock above, below, or on the SML?
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