Assume that the risk$-$free rate is $4\%$ and the expected rate of return on the stock market index is $12\%.$ Company A$$s stock is trading at $$100/$share today. The CAPM beta of Company$$s A$$s stock is $1\mathrm{.}25.$ Also, it is well known in the market that Company A will pay out a dividend of $$9$ per share at the end of the year to all equity owners.

Problem. $($a$)$ What is the $$fair$$ expected return of Company A$$s stock according to the CAPM?

Problem. $($b$)$ Using the $$fair$$ return calculated from Part $($a$),$ calculate the price that the investors expect this stock to attain at the end of the year. In other words, at the end of the year, what price should investors expect this stock to be traded at$?$