Shares of Meta Platforms Inc trade at $190 today. Analysts believe that the stock will trade at $210 in exactly one year. Currently, the risk free rate is 0.50%, while the market portfolio risk premium is 6%. The stock is fairly priced. Suppose that the Federal Reserve raises interest rates and the risk free rate is increased to 1% (assume that the market portfolio risk premium stays the same). 

If analysts still believe that the stock will trade at $210 in one year, what must the current price adjust to?

Answer rating: 100% (QA)

To calculate the adjusted current price of Meta Platforms Inc stock when the riskfree rate increases ... View the full answer