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Suppose you consider buying a share of stock at a price of $55. The stock is expected to pay a dividend of $6 next year
Suppose you consider buying a share of stock at a price of $55. The stock is expected to pay a dividend of $6 next year and to sell then for $57. 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. c-2. Calculate the expected rate of return, using the expected price and dividend for next year. (Round your answer to 2 decimal places.)
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