# Question

A share of stock sells for $ 50 today. It will pay a dividend of $ 6 per share at the end of the year. Its beta is 1.2. What do investors expect the stock to sell for at the end of the year?

Assume that the risk- free rate of interest is 6 percent and the expected rate of return on the market is 16 percent.

Assume that the risk- free rate of interest is 6 percent and the expected rate of return on the market is 16 percent.

## Answer to relevant Questions

I am buying a firm with an expected cash flow of $ 1,000 but am unsure of its risk. If I think the beta of the firm is 0.5, when in fact the beta is really 1, how much more will I offer for the firm than it is truly worth? ...Assume that both portfolios A and B are well diversified, that E( rA) = .12, and E( rB) = .09. If the economy has only one factor, and ßA = 1.2 whereas ßB = .8, what must the risk- free rate be? Suppose that during a certain week the Fed in the U. S. announces a new monetary growth policy. Congress surprisingly passes legislation restricting imports of foreign automobiles, and Ford comes out with a new car model ...Richard Roll, in an article on using the CAPM to evaluate portfolio performance, indicated that it may not be possible to evaluate portfolio management ability if there is an error in the benchmark used. a. In evaluating ...The spot rates of interest for five Canada bonds are shown in the following table. Assume all securities pay interest annually. Spot Rates of Interest Term to Maturity (years) Spot Rate of Interest (%) 1............. ...Post your question

0