Question: 1. (10 points) Consider two stocks, A and B. Stock A is currently traded at a price of $30, it is expected to pay a

1. (10 points) Consider two stocks, A and B. Stock A

1. (10 points) Consider two stocks, A and B. Stock A is currently traded at a price of $30, it is expected to pay a dividend of S1 next year and to sell then at a price of $32. Stock B is currently traded at $15, and it is expected to pay a dividend of 80.5 next year and to sell then at a price of $16. Stock A has a beta of 1.2 and stock B has a beta of 1.5. The expected market rate of return is 9% and the risk-free rate is 5%. Which stock is a better buy? Must show detailed computations to support your conclusion

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