The current stock price of the Down Under Clothing Company of Australia is A$50 per share and
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Question:
The current stock price of the Down Under Clothing Company of Australia is A$50 per share and its expected rate of return over the coming year is 14%. The market risk premium in Australia is 8% per year and the risk-free interest rate 6% per year. According to the CAPM, what would happen to the stock's current price if the covariance of the stock with the market portfolio falls by half while everthing else remians the same?
Related Book For
Valuation The Art and Science of Corporate Investment Decisions
ISBN: 978-0133479522
3rd edition
Authors: Sheridan Titman, John D. Martin
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