The next expected dividend for Stock P is $2.50, the current price of the stock is $32.50, and the firm is expected to grow at a constant rate of 4 percent per year forever. The risk free rate is 3 percent, the market risk premium is 5.5 percent, and the stock's beta is 1.2. Based on the given information, which of the following statements is correct?
A. An investor should buy this stock because its expected rate of return, 11.69 percent, is greater than its required rate of return, 9.6 percent.
B. An investor should not buy this stock because its expected rate of return, 9.6 percent, is greater than its required rate of return, 11.69 percent.
C. An investor should not buy this stock because its intrinsic value, $44.64, is greater than its current price of $32.50.
D. An investor should not buy this stock because its current price, $32.50, is not equal to its intrinsic value, $44.64.
E. An investor should be indifferent toward buying or selling the stock because its required rate of return is equal to its expected rate of return, 11.69 percent.
Answer: A
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The victim of stolen trade secrets can recover any profits made by someone from the stolen trade
secret. Indicate whether the statement is true or false
Under the RMBCA, a newly formed corporation need not hold an organizational meeting
a. True b. False Indicate whether the statement is true or false
The risk-adjusted discount rate approach is used in the analysis of projects for which ____ is the applicable risk measure
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