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Unformatted text preview: General Electric and the observed trading price for the stock. Its possible that the model used to determine the price may be incorrect, i.e., the constant growth model may not be appropriate. Its also possible that the inputs into the model may be incorrect, for example, General Electrics beta may be lower than 0.91 or the market return used may be incorrect. Finally, its possible that the model may be correct but the market may be inefficient and has overvalued the stock. 64...
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- Spring '08