Friday, December 16, 2011

Is this stock overpriced, underpriced or fairly priced?

Britain Motors is trying to estimate if its stock is overpriced, under-priced, of fairly priced. The yst igned looked up the S&P Index for the year which was 12%, and looked up the T-Bill rate, which was 3%. Then he looked at three other specialty auto dealers' betas, and found 1.2, 1.6, and .9. Britain's dividends are growing at an annual rate of 3% and the last dividend paid was $2.50. The current market price of Britain is $26.14. The stock is over, under, or fairly priced?

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