1 [Total: 33 marks] Assume that the CAPM holds, but that the market portfolio is unobservable, so that the return on the market portfolio is unknown (therefore, so are betas). The annual risk-free rate is 5%. (a) Stock A will pay a dividend of $2 per share in one year and its dividend in subsequent years is expected to grow at a constant rate of 5% per year forever. Its current ex-dividend stock price is $40. Determine the expected return on Stock A. [4 marks] (b) Stock B is expected to pay a dividend of $0.20 per share in one year, growing at a constant rate of 10% per year forever. Its current price is $2. By how many