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You expect the price of ABC stock to be $27 per share a year from now. Its current market price is $25, and you expect
You expect the price of ABC stock to be $27 per share a year from now. Its current market price is $25, and you expect it to pay a dividend one year from now of $0.5 per share. Its CAPM beta is 0.7. the risk-free rate is 1%, and the market risk premium is 8%. What is the required rate of return on ABC? (Hint: use the CAPM model). 4.9% 6.6% 5.9% 5.6%
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