Two stocks each pay a $1 dividend that is growing annually at 4 percent. Stock A's beta = 1.3; stock B's beta = 0.8. a. Which stock is more volatile? b. If Treasury bills yield 2 percent and you expect the market to rise by 8 percent, what is your risk-adjusted required return for each stock? c. Using the dividend-growth model, what is the maximum price you would be willing to pay for each stock? d. Why are their valuations different?

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A: Computation:

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A: Stock's Current Price = Dividend / ( Required rate of return - growth rate)

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A: Formula: Current stock price = Expected dividend / (Required return - Growth rate)

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A: Calculate the future value and present value for expected dividends as follows:

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A: The calculation is:

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A: Current price = $27 Required return = 0.13 Growth rate = 0.055

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A: Rate at which dividend is grow year by year is called dividend growth rate. It can be same every…

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A:

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A:

Q: The following graph shows the value of a stock’s dividends over time. The stock’s current dividend…

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A:

Q: The future earnings, dividends, and common stock price ofCallahan Technologies Inc. are expected to…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three subparts…

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A: In the given question we are asked to calculate present value of dividend. First we have to…