1. The stock price of Tonys Corp is $40 today. The expected return on its stock is 12%. Assume the stock will pay a constant (annual) dividend in perpetuity. What should the dividend be if the stock is fairly priced today? ans= 4.8

2. The risk-free rate is 3% and the return on the market portfolio is 9%. Assume the beta of Tonys Corp suddenly changes to 1.2. What is the expected return on its stock, according to the CAPM? ______% ans=10.2

3. what should the stock price be after the beta of Tonys Corp has changed?