The current value of the stock is $13.97.
Return required=risk-free rate + beta* (market rate-risk free rate)
=5+0.88*(15-5)
=13.8%
D1/current price (Required return-Growth rate)
=(0.75*1.08)/(0.138-0.08)
=$13.97(Approx).
This price represents the most recent exchange for a share of stock or other security. In a free market, the starting point is the current price. For a subsequent transaction involving that security, it indicates the price a buyer is willing to pay and the price a seller is willing to accept.
The price or market value of the stock is known as the stock. Value, however, is what resides in the asset. What the stock is worth determines value, which in turn depends on how much future cash flow the company can provide.
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