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Liam owns 1 share of stock A and 1 share of stock B. In 1 year...

Liam owns 1 share of stock A and 1 share of stock B. In 1 year from today, the total value of his holdings is expected to be 162.22 dollars. Stock A is currently priced at 76.7 dollars, has an expected return of 7.99 percent, and is expected to pay a dividend of 3.38 dollars in 1 year from today. Stock B has an expected return of 5.16 percent and is expected to pay a dividend of 6.82 dollars in 1 year from today. What is the price of stock B today?

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Answer #1

price= dividend / expected rate of return

= 6.82 / 5.16%

= 132.17

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