Question $1$

$1\mathrm{.}5$ points

A share of stock with a beta of $1\mathrm{.}0$ currently sells for $$50.$ Investors expect the stock to pay a year$-$end dividend of $$5.$ The T$-$bill rate is $1\%,$ and the market risk premium is $6\%.$ If the stock is perceived to be fairly priced today, what much be investors' expectation of the price of the stock at the end of the year? $ $q,$ Hint: $[$CAPM$]$ Expected Return $(R)=R_f+$ Beta$*$Market Risk Premium; Expected Return $(R)=$ Dividend Yield $+$ Capital Gains Yield, where dividend yield $=\frac{D_1}{P_0}$ and capital gains yield $=\frac{P_1-P_0}{P_0}.P_1$ denotes expected price at the end of the year.