1. Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $55. The stock will pay a dividend at year-end of $2.50. Assume that risk-free Treasury securities currently offer an interest rate of 2.5%.

Average rates of return on Treasury bills, government bonds, and common stocks, 19002015 (figures in percent per year) are as follows.

Portfolio	Average Annual Rate of Return (%)			Average Premium (Extra return versus Treasury bills) (%)
Treasury bills		3.8
Treasury bonds		5.3			1.5
Common stocks		11.4			7.6
What price should she be willing to pay for the stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price___ 2. A stock will provide a rate of return of either 20% or 30%. If both possibilities are equally likely, calculate the stock's expected return and standard deviation. (Do not round intermediate calculations. Enter your answers as a whole percent.) Standard deviation ___%