Problemibms stock is currently selling at 1144 this year, Ask an Expert

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Problem:

IBM's stock is currently selling at $ 11.44. This year the firm had earnings per share of $2.80 and the current dividend is $ 0.68. Earnings are expected to grow 7% a year in the foreseeable future. The risk free rate is 10 percent and the expected market return is 14.2 percent

Required:

Question: What will be the effect on the price of IBM's stock if systematic risk increases by 40 percent, all other factors remaining constant.

Note: Please show how to work it out.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91163455

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