Hscc a wholly owned subsidiary of novel inc has a beta of


• HSCC, a wholly owned subsidiary of Novel Inc. has a beta of 1.2 when computed against the market portfolio

• One year from now, this subsidiary has a 0.8 probability of being worth $18 per share and a 0.2 probability of being worth $38 per share

• The risk-free rate is 4% per year

• The market portfolio has an expected return of 9% per year

• What is the present value of a share of HSCC, assuming no dividend payments to the parent firm in the coming year?

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Financial Management: Hscc a wholly owned subsidiary of novel inc has a beta of
Reference No:- TGS02766988

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