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A share of stock with a beta of 0 . 8 currently sells for $ 5 0 . Investors expect the stock to pay a
A share of stock with a beta of currently sells for $ Investors expect the stock to pay a yearend dividend of $ The Tbill rate is and the market risk premium is If the stock is perceived to be fairly priced today, what much be investors expectation of the price of the stock at the end of the year? $ Hint: CAPM Expected Return R Rf BetaMarket Risk Premium; Expected Return R Dividend Yield Capital Gains Yield, where dividend yield DP and capital gains yield PPP
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