1. Market Equilibrium: Bingo Inc. has a beta of 1.5, a market price of $50, and recently paid a…
1. Market Equilibrium: Bingo Inc. has a beta of 1.5, a market price of $50, and recently paid a dividend of $2.00 which is expected to grow at a constant rate of 5%. The risk-free rate is 2% and the market risk premium is 6%. 1. Compute the required rate of return on Bingo stock. 2. Compute the expected return on Bingo stock. 3. Compute the dividend yield and capital gains yield for Bingo’s stock. 4. Is Bingo’s stock in equilibrium? If not, then explain what will happen to move Bingo’s stock towards equilibrium. Mar 29 2022 03:12 PM
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