6. Company ABC trades in the stock market. Its = 1. The market portfolio return is 12%. What is the expected return on the companys stock?

Companys stock has a beta of 1.00 which shows that the companys stock is as risky as market portfolio.

If companys stock is as risky as market portfolio, then expected return on companys stock will be equal to the return on market portfolio.

Expected Return on Companys Stock = Return on Market Portfolio Expected Return on Companys Stock = 12.00%

So, the expected return on company's stock is 12.00%

7. You are going to receive dividends from company ABC in years 1 and 2. After that, the company will disappear. The dividends will be $100 in every period. What is the price of the companys stock if you use the information from the previous question?