A share of stock is now selling for $100. It will pay a dividend of $9 per

Question:

A share of stock is now selling for $100. It will pay a dividend of $9 per share at the end of the year. Its beta is 1. What do investors expect the stock to sell for at the end of the year?

Assume the risk-free rate is 8% and the expected rate of return on the market is 18%.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...