Question: 8 Problem 12-16 CAPM and Expected Return (LO2) A share of stock with a beta of 0.75 now sells for $50. Investors expect the stock

Problem 12-16 CAPM and Expected Return (LO2) A share of stock with a beta of 0.75 now sells for $50. Investors expect the stock to pay a year-end dividend of $2. The T.bill fate is 4%, and the market risk premium is 7%. a. Suppose investors believe the stock will sell for $52 at year-end. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do? b. At what price will the stock reach an "equilbrium" at which it is perceived as fairly priced today

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