Price of Stock and Value of Beta Assignment | Homework For You

Problem 5 (10 marks). Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%.Homework For You

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a) A share of stock sells for $50 today. It will pay a dividend of $6 per share at the end of the year. Its beta is 1.2.

What do investors expect the stock to sell for at the end of the year? (5 marks)

b) A stock has an expected rate of return of 4%. What is its beta? (5 marks)

Problem 5:

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a) HPR formula;

b) CAPM formula. Get Finance homework help today

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