Use the following information for the next 6 questions.

Suppose ABC stock is currently trading at $46 and is expected (1) to be worth $52 at the end of one year and (2) to pay a $1 dividend

1.What is the expected holding period return of ABC stock? Enter as a decimal (rather than a percent) and round to two decimal places.

2. Suppose the risk free rate is 4% and the expected market return is 13%. ABC stock has a beta of 1.4. What is the required rate of return for ABC stock? Enter as a decimal and round to three decimal places.

3. Given your previous answers, is ABC stock currently over- or under-valued?

4. What is the intrinsic value of ABC stock? Round to two decimal places

5. Assume ABC will pay the $1 dividend and is expected to grow their dividend at 5%. What is the intrinsic value of the stock? Use the constant growth dividend discount model and use same CAPM assumptions. Round to two decimal places.

6. What is the intrinsic value of ABC if there is zero expected growth? (Hint: use the same formula as the previous problem). Round to two decimal places.