Greystone Inc. plans to pay a $4.30 dividend during the upcoming year, and dividends are expected to grow at the rate of 8% per year. The risk free rate is 6% and the expected return on the market portfolio is 12%. The current price of the stock is $85. What is the estimated beta of Greystone, Inc.
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Ответ:
Beta = 1.18
Explanation:
The computation of the beta is shown below:
But before that we need to calculate the following calculations
Current stock price = D1 ÷ (Required rate of return - growth rate)
$85 = $4.30 ÷ (Ke - 0.08)
(Ke - 0.08) = 0.0506
Ke = 0.1306
= 13.06%
Now
Expected rate of return(Ke) = Risk free rate + Beta × (Market rate of return - Risk free rate of return)
13.06% = 6% + Beta × (12% - 6%)
13.06% = 6% + Beta × 6%
So, the Beta = 1.18
Ответ:
c. a large company charging beow its production cost in order to eliminate competition.
Explanation:
predatory pricing is the illegal act of setting prices low in an attempt to eliminate the competition.