A firm just paid a dividend of RM2.00 on its common stock and expects to...
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Accounting
A firm just paid a dividend of RM2.00 on its common stock and expects to continue paying dividends, which are expected to grow at 5 percent each year from now to infinity. The current market price of this stock is RM55. If the required rate of return for this stock is 9 percent, should you buy the stock?
a. No, because the stock is overpriced RM2.50.
b. Yes, because the stock is underpriced RM5.00.
c. Yes, because the stock is underpriced RM2.50.
d. No, because the stock is overpriced RM5.00.
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