2. Risk and Valuation. Suppose that a company paid a dividend of $1.75 this year...
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2. Risk and Valuation. Suppose that a company paid a dividend of $1.75 this year and expects dividends to grow at 5% indefinitely. a. If the company's beta is 1.2, the market return is 8%, and the risk-free rate is 2.5%, what is the required rate of return for this company? (5 points) b. What is the most you should be willing to pay for a share of stock? (10 points)
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