Determining the stock of qed


Assignment:

Your broker suggests that the stock of QED is a good purchase at $25. You do an analysis of the firm, determining that the $1.40 dividend and earnings should continue to grow indefinitely at 8 percent annually. The firm's beta coefficient is 1.34, and the yield on Treasury bills is 7.4 percent. If you expect the market to earn a return of 12 percent, should you follow your broker's suggestion?

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Finance Basics: Determining the stock of qed
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