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Stock X is expected to pay a dividend of $5.40 annually in perpetuity. Stock X has a beta of 0.70, the risk- free rate i
Posted: Sun Jul 03, 2022 6:42 am
by answerhappygod
- Stock X Is Expected To Pay A Dividend Of 5 40 Annually In Perpetuity Stock X Has A Beta Of 0 70 The Risk Free Rate I 1 (25.56 KiB) Viewed 15 times
Stock X is expected to pay a dividend of $5.40 annually in perpetuity. Stock X has a beta of 0.70, the risk- free rate is 3.5%, and the market risk premium is 7.5%. 6 pts a. Draw a graph of the SML. Label the axes. b. Plot the following points on the graph, and include their numeric coordinates: the risk-free asset and stock X. c. If the current observed price of X is $58.50, what return would we expect given the forecasted perpetual dividend? Plot this on the graph, and identify alpha of stock X on the graph, including its numeric value.