(A)Given a Risk-Free Rate of 5

question 61

Essay

(a)Given a risk-free rate of 5.5% and a market return of 12%, calculate ABC's required return on equity if its beta is 1.4.(b)If ABC just paid a dividend of $1.39 and these dividends are expected to grow at 5% pa, calculate an estimate of its price.(c)If ABC's current price is $23.73, what trading recommendation would you make?

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Definitions:

Deviant Behavior

Actions that violate societal norms or expectations, which can vary widely among different cultures and communities.

Subjective Experience

The personal and individual perception or feeling of an event or reality, influenced by personal biases, emotions, and mental state.

Deviant Person

An individual who engages in behavior that deviates from accepted societal norms, thus attracting social stigma or legal sanctions.

Positivist Perspective

A viewpoint in sociology that relies on positive facts and empirical evidence to understand and interpret social behaviors.