Unformatted text preview: General Electric and the observed trading price for the stock. It’s possible that the model used to determine the price may be incorrect, i.e., the constant growth model may not be appropriate. It’s also possible that the inputs into the model may be incorrect, for example, General Electric’s 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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This note was uploaded on 08/22/2009 for the course FIN 3310 taught by Professor Potts during the Spring '08 term at Baylor.
- Spring '08