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SteveS, MBA
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Suppose that the required rate of return to a diversified investor

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Suppose that the required rate of return to a diversified investor is 10%, while the required rate of return to a nondiversified investor is 14%. If D1 = 2, and g = 5%, how would diversified and nondiversified investors value this stock?
a. The diversified investor is willing to pay $17.78 more.
b. The diversified investor will never pay more because they do not have to.
c. The nondiversified investor will pay $16.78 more.
d. The nondiversified investor will always pay more because they can afford to.
Submitted: 6 years ago.
Category: Homework
Expert:  SteveS replied 6 years ago.

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