Firm krsquos shares sell today for 45 it is forecast that, Ask an Expert

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Firm K’s shares sell today for $45. It is forecast that the share price will be $51 at the end of one year. Also at that time, a dividend of $2.50 is expected to be paid. Firm K’s β is 0.87, the riskless return is 3% and the market risk premium is 7%. Is firm K correctly priced, overpriced, or underpriced? Support your answer with calculations and explanation.

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Financial Management, Finance

Category:- Financial Management
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