HDTV Has Planned on Diversifying into the VR Field

question 113

Multiple Choice

HDTV has planned on diversifying into the VR field. As a result, HDTV's beta would rise to 1.6 from 1.2 and the expected future long-term growth rate in the firm's earnings would increase from 12% to 16%. The expected market return, k_m, is 14%; the risk-free rate, r_f, is 7%; and the current dividend, D_o, is $0.50. Should HDTV go into the VR field?

• A) No, stock price decreases $7.82.
• B) Yes, stock price increases $9.89.
• C) Yes, stock price increases $3.81.
• D) No, stock price decreases $3.78.

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Definitions:

Long Message Chains

Series of correspondences or communications that extend over a significant period of time or include many interconnected messages.

Project Management

The application of processes, methods, skills, knowledge, and experience to achieve specific project objectives according to the project acceptance criteria within agreed parameters.

Communication Tool

Any device, platform, or application that facilitates the exchange of information between individuals or groups.

Knee Replacement

A surgical procedure to replace a knee joint that is damaged by arthritis or injury with an artificial joint made of metal and plastic components.