Problem 30-You've collected the following information for two stocks:

	Stock 1	Stock 2
Beta	0.8	1.5
Dividend yield	7%	1%
Growth rate	4%	8%

The risk-free rate is 2% and the expected return on the market portfolio is 8%.

Part 1-Without doing any calculations, which stock should you buy?

Part 2-What is the required return for stock 1 based on the CAPM?

Part 3-What is the required return for stock 2 based on the CAPM?

Part 4-Which stock should you buy?

Part 5-What is the expected return for stock 1 based on the constant growth model?

Part 6-What is the expected return for stock 2 based on the constant growth model?

Part 7-Which stock should you buy?