The Stock of the Delta Corporation Has a Beta of 1.9

question 31

Multiple Choice

The stock of the Delta Corporation has a beta of 1.9. The stock recently paid an annual dividend of $1.60, and dividends are expected to grow at a rate of 10% indefinitely. The equity
Premium has averaged 8% in recent years, and it is expected to remain at this level for the
Foreseeable future. The relevant risk-free rate is 5%. What is the maximum price you should
Pay for a share of the Delta Corporation, according to CAPM?

• A)$32.00
• B)$15.69
• C)$17.25
• D)none of the above

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Definitions:

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A psychological phenomenon where noticeably different items are more likely to be remembered than common ones.

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The ability to remember previously experienced events or information, often measured in psychological tests or assessments.

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The meaning or interpretation of a word, phrase, sentence, or text, in terms of the relationships between the symbols and what they represent.

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