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Unformatted text preview: to 3% and r M to fall to 10%. What would happen to Upton's price? Round your answer to two decimal places. ________ c. In addition to the change in part b, suppose investors' risk aversion declines, and this, combined with the decline in r RF , causes r M to fall to 9%. Now, what is Upton's price? Round your answer to two decimal places. ________ d. Now suppose Upton has a change in management. The new group institutes policies that increase the expected constant growth rate from 3% to 4%. Also, the new management smoothes out fluctuations in sales and profits, causing beta to decline from 1.80 to 1.00. Assume that r RF and r M are equal to the values in part c. After all these changes, what is its new equilibrium price? Round your answer to two decimal places. ________...
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This note was uploaded on 09/07/2011 for the course BMGT 340 taught by Professor White during the Spring '08 term at Maryland.
 Spring '08
 WHITE
 Finance, Dividends

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