2 CAPM A firm's current stock price is $50, and its expected yield over the year is 0.14. The market risk premium is 0.08 and the riskless interest rate is 0.06. What would happen to the stock price if its expected future payout remains constant while the covariance of its rate of return with the market portfolio falls by 50%? What if the covarian ce increases by 50%? 2 CAPM A firm's current stock price is $50, and its expected yield over the year is 0.14. The market risk premium is 0.08 and the riskless interest rate is 0.06. What would happen to the stock price if its expected future payout remains constant while the covariance of its rate of return with the market portfolio falls by 50%? What if the covarian ce increases by 50%