Question: 1. Does CAPM Work? 2. What are some of Application problems of CAPM? 3. Chicago Corp stock will pay a dividend of $1.32 next year.

1. Does CAPM Work? 2. What are some of Application problems

1. Does CAPM Work? 2. What are some of Application problems of CAPM? 3. Chicago Corp stock will pay a dividend of $1.32 next year. Its current price is $24.625 per share. The beta for the stock is 1.35 and the expected return on the market is 13.5%. If the riskless rate is 8.2%, what is the expected growth rate of Chicago? 4. Calculate the B of Saumu Corporation from the following data. The prices are at the beginning and end of each year: YEAR RISKLESS RATE PRICE OF SAUMU DIVIDEND OF MARKET INDEX MARKET SAUMU DIVIDEND 100-105 Sh. 1.00 25-27 3.05% 6.00% 2017 1105 -110 3.00 % Sh. 1.00 16.00% 2018 27-29 1110-120 2.95 % 5.95% Sh. 1.50 2019 29-32 2.8 % 5.90% 1120-125 Sh. 1.50 2020 32-33

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