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Should mr gomez buy more of cornelle stock

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Question - The Stock of Cornelle Company has a beta of 1.5. the Risk-free rate is 4% and the market risk premium is 4%. Mr. Gomez', a marginal investor, has a protfolio which contains stocks of Cornelle. He analyzes Cornelle stocks' prospects and concludes that its earnings, dividends, and price can pe expected to grow at a constant rate of 5% per year . Mr Gomez observed that the current price of Cornelle Company stock is 120 per share, the lates dividend paid waas 8 per share and is in equilibrium. Should mr Gomez buy more of Cornelle's Stock, sell stock or maintain the present position?

Reference no: EM133035873

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