Problem 5 (10 marks). Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%. FINA202 - Assignment 1 Cheng Zhang a) A share of stock sells for $50 today. It will pay a dividend of S6 per share at the end of the year. Its beta is 1.2. What do investors expect the stock to sell for at the end 5 marks 5 marks of the year? b) A stock has an expected rate of return of 4%. What is its beta