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A share of stock with a beta of 0.66 now sells for $48. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 5%, and the market risk premium is 8%.
a. Suppose investors believe the stock will sell for $50 at year-end. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do? (Do not round intermediate calculations. Round your opportunity cost of capital calculation as a whole percentage rounded to 2 decimal places.)
b. At what price will the stock reach an "equilibrium" at which it is perceived as fairly priced today? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
A fall in the value of the US dollar against other currencies makes US final goods and services cheaper to foreigners even though the US aggregate price level stays the same. As a result, foreigners demand more American aggregate output. You, however..
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Anyone can explain what is effective communication? Please list the three main types of communication skills.
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?a) What distribution would they use to model the? selection? ?b) What is the probability that a randomly selected cell phone will be one of the last 87 to be
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Suppose that, over the short run (say, the next five years), demand for OPEC oil is given by Q = 57.5 - .5P or, equivalently, P = 115 - 2Q. (Here Q is measured in millions of barrels per day.) OPEC’s marginal cost per barrel is $15. What is OPEC’s op..
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