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Capital Asset Pricing Model Consider a stock whose share price one year from now is expected to be $ 1 1 7 . The stock

Capital Asset Pricing Model
Consider a stock whose share price one year from now is expected to be $117. The stock will pay no divi-
dends, and its beta is 1.8. Assume that the risk-free rate is 4.5% and the market risk premium is 6%.
(a) According to the CAPM, what is the expected return on this stock?
(b) What should be the stock price as of today?
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