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Business, 27.06.2020 21:01 mxhx

A share of stock with a beta of 0.75 now sells for $50. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 4%, and the market risk premium is 7%. a. Suppose investors believe the stock will sell for $52 at year-end. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do?

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A share of stock with a beta of 0.75 now sells for $50. Investors expect the stock to pay a year-end...
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