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Top hedge fund manager Sally Buffit believes that a stock with the same market risk...

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Finance

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Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of 547. The stock will pay a dividend at year-end of $2.00. Assume that risk-free Treasury securities currently offer an interest rate of 2.3%. Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2017 (figures in percent per year) are as Follows. Average Premium (Extra return versus Treasury bills) (%) Average Annual Rate of Return (%) 3.8 Portfolio Treasury bills Treasury bonds Common stocks 5.3 1.5 11.5 7.7 . What is the discount rate on the stock? (Enter your answer as a percent rounded to 2 decimal places.) Discount rate . What price should she be willing to pay for the stock today? (Do not round intermediate calculations. Round your answer to 2 slecimal places.) Stock price

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