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Two stocks each pay a $1 dividend that is growing annually at 8 percent. Stock A...
Two stocks each pay a $1 dividend that is growing annually at 8 percent. Stock A has a beta of 1.3; stock B's beta is 0.8. Which stock is more volatile? a. If treasury bills yield 6 percent and you expect the market to rise by 12 percent, what is your risk-adjusted required rate of return? b. Using the dividend-growth model, what is the maximum amount you would be willing to pay for each stock? C. d. Why are your valuations different? vE E T T T TT Paragraph vArial 3(12pt) T T XDOQ HTML CSS Mashups
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(9) More the ß valine, more is the volatility Sime BA> BB, :-[ A is more volatile] FonA b) to Regd. rehun - Risk - free return t beta x (market retwas – guish- free rate) = 6% +1:3C124. - 670) = [13.8% & Fan B = 6% +08 (12%. – 6%) = $10.84.] (C) FOR A Peiler Last dividend & (It regd. rehun - growth rate) growth rate regid. retina $1+(1+84.) = 13.8%. - 8t. -$18.62 $ For B $1*(1+8%) Torsh ovce - Perce = 10.8% - 87. - 1$38.57 (d) Because grequined return is different Sero use retu
![(9) More the ß valine, more is the volatility Sime BA> BB, :-[ A is more volatile] FonA b) to Regd. rehun - Risk - free retur](http://img.homeworklib.com/questions/e0a4a0d0-6fa4-11ea-9d17-17aef22a2eaa.png?x-oss-process=image/resize,w_560)
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