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Need this done with all work and formulas shown as well as explanation. Please. The current market price of Princo, stock is $50, and its
Need this done with all work and formulas shown as well as explanation. Please.
The current market price of Princo, stock is $50, and its expected return is 13%, the riskless rate of interest is 1.5%, and the return on the market portfolio is 10%. a. According to CAPM, what is the current beta of Primco? b. What will be the beta of this security if the covariance of its rate of return with the market portfolio doubles? According to CAPM, what is the new expected return on Primco? Suppose that Primcohas just paid a $1 dividend. Dividends on Primco, are paid annually and are expected to grow at the constant annual rate of 5%. What is the new price of this security? How is your result consistent with our understanding that assets with higher systematic risks must pay higher returns on average? c. d. eStep by Step Solution
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