Stock is expected to pay constant dividend in perpetuity

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Reference no: EM131910307

The market price of a security is $50. Its expected rate of return is 14%. The risk-free rate is 6% and the market risk premium is 8.5%. What will be the market price of the security if its correlation coefficient with the market portfolio doubles (and all other variables remain unchanged)? Assuming that the stock is expected to pay a constant dividend in perpetuity.

Reference no: EM131910307

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