Shares of gangnam styles common stock

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Reference no: EM131056857

You are considering buying 500 shares of Gangnam Style’s common stock. The common stock is expected to pay a dividend of $4.50 a year from today; the growth rate of the dividends is 4%; the covariance between Gangnam Style’s return and the marker’s return is expected to be 0.02; the standard deviation of the market’s return is expected to be 0.1. It is also estimated that the return on the TSX/S&P is 11% and the return on government of Canada T-Bills is 6%. Should you buy the shares if the current market price of Gangnam Style’s common stock is $35.00? Show your work.

Reference no: EM131056857

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