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What will be the percentage change in the share price

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Reference no: EM133188353

Question - The market price of a security is $72. Its expected rate of return is 11%. The risk-free rate is 7%, and the market risk premium is 7%.

(i) What will the market price of the security be if its beta doubles (and all other variables remain unchanged)?

(ii) What will be the percentage change in the share price? Assume the stock is expected to pay a constant dividend in perpetuity.

Reference no: EM133188353

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