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Required rate on stock

Barramundi Inc. stock is currently selling at $40 per share (its equilibrium price) given that the risk free interest rate is 8% and the equilibrium risk premium on the market portfolio is 6%. the firm's long run growth is expected to remain 7% per year forever. Last year's EPS were $4, and the dividend payout ratio is 50%. if beta increases by 50%, by how much will the stock price change? (assume all other factors remain constant)

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M928950

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