Questions (A14-A16) are based on the information that follows. Initex Corporation's stock trades at $156.08.B...
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Questions (A14-A16) are based on the information that follows. Initex Corporation's stock trades at $156.08.B - 1.10, RM=15%, RRE= 5% and it pays the following dividends. Do = $4.24: D1 = $4.80; D2 =$6.40; D3 =$7.30. After that dividends grow at the constant rate of 12% forever. A15. The best course of action if you already own the stock is to? (a) Sell it as soon as possible. It is 8% overvalued. (b) Hold on to it. You have bought a stock that is 5% undervalued. (c) Do nothing as the stock is fairly priced and plots along the SML. (d) Sell it as soon as possible. It is 8.0% overvalued. (e) Hold on to You have bought a stock that is 18.5% undervalued and it is due to increase in price shortly
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