What is the intrinsic price of a stock that pays a dividend of $2.43, has a dividend growth rate of 3.5% and a Beta of 1.20? The market return is 5.15% and the risk free rate is 3%.O A. $21.84O B. $33.66O C. $40.67O D. $120.92QUESTION 18What is the intrinsic price of a stock that pays a dividend of 60 cents, has a dividend growth rate of 4.80% and a Beta of 2.57? The market return is 7.75% and the risk free rate is2.5%.O A. $1.22O B. $5.62O C. $6.19O D. $25.39

Stock valuation method is essentially based on the concept of time value of money. The stock…

What is the intrinsic price of a stock that pays a dividend of $2.43, has a dividend growth rate of 3.5% and a Beta of 1.20? The market return is 5.15% and the risk free rate is 3%. OA. $21.84 OB. $33.66 O C. $40.67 O D. $120.92

What is the intrinsic price of a stock that pays a dividend of $2.43, has a dividend growth rate of 3.5% and a Beta of 1.20? The market return is 5.15% and the risk free rate is 3%. OA. $21.84 OB. $33.66 O C. $40.67 O D. $120.92

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 2P: AA Corporations stock has a beta of 0.8. The risk-free rate is 4%, and the expected return on the...

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Concept explainers

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

What is the intrinsic price of a stock that pays a dividend of $2.43, has a dividend growth rate of 3.5% and a Beta of 1.20? The market return is 5.15% and the risk free rate is 3%.
O A. $21.84
O B. $33.66
O C. $40.67
O D. $120.92
QUESTION 18
What is the intrinsic price of a stock that pays a dividend of 60 cents, has a dividend growth rate of 4.80% and a Beta of 2.57? The market return is 7.75% and the risk free rate is
2.5%.
O A. $1.22
O B. $5.62
O C. $6.19
O D. $25.39

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