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How will the share price change

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Question 1: You are an analyst who follows Great Windows' stock. Although the current stock price is $37.50, you believe the stock is worth either $25 or $50, depending on the success of a new product launch. If Great Windows' CEO announces that she plans to buy 10,000 additional shares in the company, how will the share price change?

Question 2: Suppose drug retailer CVS has an equity beta of 0.80 and a debt-equity ratio of 0.10. Estimate its asset beta assuming its debt beta is zero. Suppose CVS were to increase its leverage so that its debt-equity ratio was 0.50. Assuming its debt beta were still zero, what would you expect its equity beta to be after the increase in leverage?

Reference no: EM132432738

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