Proposal for a new stock, Suppose that, the president,

Proposal for a new stock

Reference no: EM13979563

Suppose that, the president, receives a proposal for a new stock. The in-vestment needed to take a position in the stock is $50 million, it will have anexpected return of 15 percent, and its estimated beta coecient is 2.0. Shouldthe new stock be purchased? At what expected rate of return should the fundbe indierent to purchasing the stock?

Reference no: EM13979563

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