25 FORMULAS Price (P/E) EPS. V. -DR: V D./kg): k- ET-PIE-Id EN) = ?X + B/E) - P/E = (1/earnings yield); V. - [E(D)E( P1+k) B, WAS-E), S. (E) 10 PAB - (Cov A. Tool Cov (A) = PADOA: Capital Gain yield - [(Ps-PayPal : Dividend yield DiviPa HPR = [(Ps-Po) DivP: HPR - Capital Gain Yield + Dividend Yield Arithmetic Average = Sum of returns in each period divided by number of periods Geometric Return = [(1+r) X (1+r) x... (1+r) - 1: E((p) =WE):R-r+E() The ABC Company has a Beta = 1.2, the risk free rate on 10 yr. US T-Notes = 2.0% and the expected return on the market portfolio = 12%. ABC Company will pay a $2.00 dividend this year and the company's dividend is expected to grow at a rate of 9% a year for the foreseeable future. The company uses the CAPM to compute the market capitalization rate on its stock. ABC's current share price should be