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An equity research analyst has come to the conclusion that three stocks have the following...

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Finance

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An equity research analyst has come to the conclusion that three stocks have the following characteristics, given this information the analyst should recommend: Stock Expected Return Beta Eenie 4% 0.3 Meenie 6% 0.7 Mo 7% 1.3 Selling (short) a portfolio with 80% weight on Eenie, 20% weight on Meenie, while buying the same aggregate dollar amount in Mo. Buying a portfolio with 60% weight on Eenie, 40% weight on Mo and selling (short) the same aggregate dollar amount in Meenie. Selling (short) a portfolio that has 60% weight on Eenie, 40% weight on Mo and buying the same aggregate dollar amount of Meenie. Buying a portfolio with 80% weight on Eenie, 20% weight on Meenie and selling (short) the same aggregate dollar amount in Mo. Which of the following is NOT a step in the adjusted present value (APV) method? Calculating the after-tax WACC Calculating the value of the interest tax shield Deducting costs arising from market imperfections Calculating the unlevered value of the project

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