The risk-free rate of return is 100 the expected rate of, Ask an Expert

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The risk-free rate of return is 10.0%, the expected rate of return on the market portfolio is 17%, and the stock of Xyrong Corporation has a beta coefficient of 1.6. Xyrong pays out 30% of its earnings in dividends, and the latest earnings announced were $15 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 20% per year on all reinvested earnings forever.

What is your expected one-year holding-period return on Xyrong stock?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92854929

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