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Q4) An analyst gathered the following information for a stock and market parameters: stock beta = 0.78; expected return on the Market = 8.50%; expected
Q4) An analyst gathered the following information for a stock and market parameters: stock beta = 0.78; expected return on the Market = 8.50%; expected return on T-bills = 1.90%; current stock Price = $5.00; expected stock price in one year = $9.47; expected dividend payment next year = $3.59. Calculate the a) Required return for this stock (1 point): b) Expected return for this stock (1 point): Q5) The market risk premium for next period is 8.10% and the risk-free rate is 2.60%. Stock Z has a beta of 1.37 and an expected return of 9.20%. What is the a) Market's reward-to-risk ratio? (1 point): b) Stock Z's reward-to-risk ratio (1 point)
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