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Shares of Meta Platforms Inc trade at $190 today. Analysts believe that the stock will trade at $210 in exactly

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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?

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To calculate the adjusted current price of Meta Platforms Inc stock when the risk free rate increase View the full answer


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Financial Accounting and Reporting a Global Perspective

Financial Accounting and Reporting a Global Perspective

ISBN: 978-1408076866

4th edition

Authors: Michel Lebas, Herve Stolowy, Yuan Ding

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Posted Date: September 07, 2023 02:04:31
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