Suppose you have the following information about a stock -
Expected Return
D0 =	$4.00
P0 =	$50
g =	3.0%
Required Return
rrf =	2%
rm =	8%
b =	1.2
To calculate the expected return on a stock, use the Constant Dividend Growth model in your analysis.
To calculate the required return on a stock using CAPM.
a) Is this stock in equilibrium? Explain your reasoning.
b) If it is not in equilibrium, determine the equilibrium price.