Stock a Has a Current Price of $25

question 90

Essay

Stock A has a current price of $25.00, a Beta of 1.25, and a dividend yield of 6%.If the Treasury bill yield is 5% and the market portfolio is expected to return 14%, what should Stock A sell for at the end of an investor's two year investment horizon?

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Definitions:

Original Stimulus

The specific element or event in classical conditioning that initially triggers a conditioned response without any need for learning.

Conditioned Stimulus

A formerly neutral signal that, once linked with an unconditioned stimulus, triggers a conditioned response.

Spontaneous Recovery

The reappearance of a previously extinguished conditioned response after a period of time without exposure to the conditioned stimulus.

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior, encouraging the subject to associate certain behaviors with certain outcomes.