Q5. A company's stock price is currently at $10 per share (year O). and it...
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Q5. A company's stock price is currently at $10 per share (year O). and it has a beta of 1.5. The financial market believes that it can pay out a $2 per share in dividend next year (year 1). Assume the market risk premium of 8% and a risk-free rate of 1%. Answer the following questions. 1. According to CAPM, what rate of return should an investor expect when they purchase shares of the firm's common stock? 2. What's a reasonable estimate for the company's future dividend growth rate
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