Question 11 PART A: A share of stock sells for $50 today. The beta of the stock is .8, and the expected return on the market is 18 percent. The stock is expected to pay a dividend of $.90 in one year. If the risk-free rate is 4.9 percent, what should the share price be in one year?

PART B: Of the following, Stock _____ has the greatest level of total risk and Stock _____ has the highest risk premium.

stock	beta	standard deviation
a	1.19	10%
b	0.98	14%
c	1.21	17%
d	1.12	27%
e	0.86	8%

a. B b. E c. D d. C e. E