Estimate the beta of the following stock: market risk premium = 25 percent, RF = 6 percent,

Question:

Estimate the beta of the following stock: market risk premium = 25 percent, RF = 6 percent, P0 = $10, expected dividend at the end of the year = $2.50, P1 = $12.50. Assume the market is in equilibrium.

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...