Multiple Choice
A stock generates a perpetual cash flow of $8 per share, per year. The market index has an expected return of 14% and the risk free rate is 3%. If the stock's listed beta is 1.0 and I believe the true beta is 1.3, how much is the stock overpriced?
A) $33.42
B) $25.78
C) $18.20
D) $10.90
Correct Answer:
Verified
Correct Answer:
Verified
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