Check my work Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $50. The stock will pay a dividend at year-end of $2. Assume that risk-free Treasury securities currently offer an interest rate of 2%. Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2017 (figures in percent per year) are as follows. Average Premium Average Annual (Extra return Rate of Return versus Treasury ed Portfolio (8 ) bills) ($) Treasury bills 3.8 Treasury bonds 5.3 1. 5 Common stocks 11 .5 7. 7 a. What is the discount rate on the stock? (Enter your answer as a percent rounded to 2 decimal places.) ances Discount rate % b. What price should she be willing to pay for the stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price Prev 1 of 5 Next