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A stock s beta is 2 . The expected return of the market is 1 2 % and the risk - free rate is 6

A stocks beta is 2. The expected return of the market is 12% and the risk-free rate is 6%.
The stocks price is currently $10. An informed analyst predicts that the price will be $11
in one year. Plot the stock on a graph relative to the security market line (SML), and
clearly label the relevant numbers (as in the textbook and the class notes). If the forecast
is correct, by what percentage would the stock price have to change today in order for it
to plot on the SML?

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