A stock with a beta of 0.75 is now selling for $50. Investors expect the stock to
Fantastic news! We've Found the answer you've been seeking!
Question:
A stock with a beta of 0.75 is now selling for $50. Investors expect the stock to pay a year-end dividend of $2. The Treasury bill rate is 4% and the market risk premium is 7%. to. Suppose investors believe the stock will sell for $52 at the end of the year. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do? (Do not round intermediate calculations. Round the opportunity cost of capital calculation as a whole percentage rounded to 2 decimal places.)
Related Book For
Intermediate Financial Management
ISBN: 978-1111530266
11th edition
Authors: Eugene F. Brigham, Phillip R. Daves
Posted Date: