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Suppose that the risk-free rate is 6.30% per annum and that the market risk premium is 9.60% per annum. Assume that you are considering buying

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Suppose that the risk-free rate is 6.30% per annum and that the market risk premium is 9.60% per annum. Assume that you are considering buying shares of Piggly Wiggly LLC. Each share of Piggly Wiggly is currently priced at $129.19 and is expected to pay $19.98 as its next dividend to shareholders one year from today.These dividends grow by 3.60% per annum. A) Based off the current market price of shares of Piggly Wiggly, what return do investors expect to earn per annum by investing in the firm's stock? % (Round to two decimal places for this answer, but use unrounded value in subsequent questions if needed) B) What would the beta of this firm's stock need to be in order for current market expectations to be consistent with CAPM? (Round to two decimal places for this answer) c) If the beta of Piggly Wiggly LLC should actually be 1.66, then according to the Capital Asset Pricing Model by what percentage are shares of the firm currently overpriced or underpriced? % (Round to two decimal places for this answer. A positive answer implies overpriced and a negative answer implies underpriced) Assume that the risk-free rate increases by 1.50%, but the market risk premium remains the same as in the original scenario. What should be the change in the required return per annum (according to CAPM) for: D) ...the shares of Walmart Inc., whose beta is 0.55? % (Round your answer to two decimal places) E) ... the shares of Clarence Saunders, Sole Owner of My Name Stores, Inc., whose beta is 1.80? % (Round your answer to two decimal places) Now assume that the risk-free rate remains the same as in the original scenario, but that the market risk premium increases by 3.50% instead. What should be the change in the required return per annum (according to CAPM) for: F)...the shares of Walmart Inc., whose beta is still 0.55? % (Round to two decimal places) G)...the shares of Clarence Saunders, Sole Owner of My Name Stores, Inc., whose beta is still 1.80? % (Round to two decimal places)

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