You are considering the purchase of a stock priced at $100 per share. If you think the stock will rise to $117 per share by the end of the year, at which time it will pay a dividend of $1 per share, what beta would it need to have for this expectation to be consistent with the CAPM? Assume the risk-free rate is 4.5% and the market risk premium is 6% Problem #5 (7 marks) You are considering purchasing some shares of CNB Inc. to add to your portfolio. The stock is currently quoted at $64 in the market. Your research has provided you with the following information: o The stock of recently paid a dividend of $2.29 per share. o Dividends are expected to grow at a rate of 1.25% forever. o Based on past returns, the standard deviation of CNB Inc. is 16%. o The stock has a correlation of 30 with returns to the overall market. o The S&P/TSX Composite Index has a standard deviation of 12%. o Historically, the market has returned 9.25% more than T-bills in an average year. o The current yield on T-Bills is 1%. Based on your analysis, should you purchase shares of CNB? Show your work