A stock is expected to pay a dividend of $3.50 in one year, and analysts expect...

 

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A stock is expected to pay a dividend of $3.50 in one year, and analysts expect its stock price at that time to be $94.20. The stock has a beta of 1.35, the risk-free rate is 4.5%, and the market risk premium is 6.0%. 4 pts a. What would you expect the current stock price to be, given the required rate of return? b. If the current observed stock price is $83.80, what expected return would it provide given the analysts' forecasts? c. What is the stock's alpha? A stock is expected to pay a dividend of $3.50 in one year, and analysts expect its stock price at that time to be $94.20. The stock has a beta of 1.35, the risk-free rate is 4.5%, and the market risk premium is 6.0%. 4 pts a. What would you expect the current stock price to be, given the required rate of return? b. If the current observed stock price is $83.80, what expected return would it provide given the analysts' forecasts? c. What is the stock's alpha?

Answer rating: 100% (QA)

answer Stock Valuation and Analysis We can use the Capital Asset Pricing Model CAPM to address these ... View the full answer