The firm beta coefficient

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Your boker suggest that the stock of Bombay Ltd is a good purchase at $25. You did an analysis on the firm, determining that the $1.40 dividend and earnings should continue to grow indefinitely at 8% annually. The firm's beta coefficient is 1.34, and the yield on treasury bills is 7.4%. If you expect the market to earn a return of 12%, should you follow your broker's suggestions?

Reference no: EM131944596

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