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Given the following information about Stock A: P 0 = $62.75 A = 1.3 D 1 = $2.20 paid at end of year K M
Given the following information about Stock A:
P0 = $62.75
A = 1.3
D1 = $2.20 paid at end of year
KM = 11% annual
Rf = 5% annual
1. Estimate the price of stock A at the end of the year.
2. Suppose that Stock A is combined with 2 other stocks as follows:
| Stock | Proportion | Beta |
| A | 0.25 | 1.3 |
| B | 0.40 | 0.9 |
| C | 0.35 | 1.1 |
What is the beta of the portfolio of the 3 stocks?
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