Suppose you consider buying a share of stock at a price of $45. The stock is expected to pay a dividend of $4 next year and to sell then for $47. The stock risk has been evaluated at = -0.5. c-1. Using the SML, calculate the fair rate of return for a stock with a =-0.5. (Round your answer to 1 decimal place.) Answer is complete but not entirely correct. Fair rate of return (2.0) % c-2. Calculate the expected rate of return, using the expected price and dividend for next year. (Round your answer to 2 decimal places.) Answer is complete and correct. Expected rate of return 13.33 % c-3. Is the stock overpriced or underpriced? < Prev 4 of 4 Next