Question: 12. You are considering a stock with a standard deviation of returns of 30%, which is much higher than the average stock's standard deviation of

12. You are considering a stock with a standard deviation of

12. You are considering a stock with a standard deviation of returns of 30%, which is much higher than the average stock's standard deviation of 15%. However, the stock's beta is 0.95. Should you expect to receive a higher rate of return to compensate for the stock's riskiness? Why or why not? (8) 13. Agarwal Technologies was founded 10 years ago. It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated that it plans to pay a $0.25 dividend 3 years from today, then to increase it at a relatively rapid rate for 2 years, and then to increase it at a constant rate of 8% thereafter. Management's forecast of the future dividend stream, along with the forecasted growth rates, is shown below. Assuming a required return of 10.00%, what is your estimate of the stock's current value? (10) Year Growth rate Dividends Paid NA $0.000 NA $0.000 NA $0.000 NA $0.250 50.00% $0.375 5 25.00% $0.469

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