You want to value the stock of California Telecom inc. in an initial public offering....
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Finance
You want to value the stock of California Telecom inc. in an initial public offering. You expect the company to pay a dividend of $1.30 and the stock price to be $30 after one year. Furthermore, you estimate the stocks beta to be 1.5. The market return is 10% and the risk-free rate is 2%. How much would you be willing to pay for the stock?
a) $26.09
b) $26.32
c) $27.27
d) $27.46
e) None of the above.
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