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Consider two firms,Chihuahua Corporation and Bernard Industries that are each expected to pay the same $1.5 million dividend every year in perpetuity.Chihuahua Corporation is riskier and has an equity cost of capital of 15%.Bernard Industries is not as shaky as Chihuahua,so Bernard has an equity cost of capital of only 10%.Assume that the market portfolio is not efficient.Both stocks have the same beta and an expected return of 12%.
-The market value for Bernard is closest to:
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An unforeseen and unplanned event or circumstance, often resulting in damage or injury.
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A corporate finance term referring to an open offer to purchase some or all of shareholders' shares in a corporation at a specific price for a specified time.
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A business entity that has recently been registered and commenced operations, typically characterized by its fresh market entry.
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