Dont use AI or CHATGPT. You are examining the pricing of banks by the market. The current
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Question:
Dont use AI or CHATGPT.
You are examining the pricing of banks by the market. The current return on equity, based on
aggregate net income and book equity, is and the cost of equity for banks is
Collectively, banks are in stable growth, growing year. Banks are trading at a discount of
on book value ie PVB and you believe that the main reason for the discount is that investors are expecting capital requirements to be increased for banks. If the net income, cost of equity and expected growth rate remain unchanged, estimate how much of a capital increase, investors are expecting for banks in percentage terms?
A
B
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D
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