Bob's is a retail chain of hardware stores. The firm has 21,000 shares of stock outstanding that are currently priced at $63 a share. Firm's Beta is 1.2. The riskfree rate is 1% and the market risk premium is 6.9%. The firm expects to pay an annual dividend of $3 in one year. Dividend is expected to grow indefinitely at 5% annually. Part 1 Attempt 1/3 for 10 pts. Assume that CAPM computes the fair stock return for the firm (DDM does not), then is firm's current share priced fairly at $63 ? What is the fair stock price? (hint: find the fair stock return computed by CAPM and plug it into DDM to find the fair price) Part 2 Attempt 1/2 for 10pts. Is the stock currently over- or under-priced? underpriced not enough information to determine fairly priced overpriced