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What growth rate would keep broken stock price constant

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Reference no: EM132966916

Broken just paid annual dividends of R2, has beta of 1.3, and a growth rate of 6% for the foreseeable future. The current return on the market is 10%, and Treasury bills earn 4%.

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Problem 1: If the rate on Treasury bills drops by 0.50% and market premium increases by 1.0%, what growth rate would keep Broken's stock price constant?

Reference no: EM132966916

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