Solution-Difference between market return and risk-free rate

Difference between market return and risk-free rate

Reference no: EM132730288

A stock with a beta of 2.71 is expected to pay a $2.24 dividend over the next year. The dividends are expected to grow at 1.88% per year forever. What is the stock's value per share (to the nearest cent, no $ symbol) if the risk-free rate is 0.23 and the market risk premium (i.e., the difference between the market return and the risk-free rate) is 7.37%?

Note: You first need to find the required rate of return (r) using the CAPM equation.

Reference no: EM132730288

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Difference between market return and risk-free rate

Reference no: EM132730288

Reference no: EM132730288

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