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Question
Paul is examining a common stock of Cino Oil Co. that currently has a beta of 1.3. The risk-free rate, which is 90-day Treasury Bill yield, is an annual rate of 6%, and the market return, which is S&P 500 index change, is an annual rate of 12%. This stock is expected to generate a constant dividend of $5.20. However, a toxic spill of Cino Oil Co. results in an international lawsuit and potential finds, and the beta of the stock jumps to 1.6. What will the new equilibrium price of the stock be?a. $33.33
b. $37.68
c. $43.33
d. $53.68
Answer
This answer is hidden. It contains 3 characters.
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