Question: Consider the following information about two stocks (D and E) and two common risk factors (1 and 2): Stock D E b1 1.2 2.6

Consider the following information about two stocks (D and E) and two

Consider the following information about two stocks (D and E) and two common risk factors (1 and 2): Stock D E b1 1.2 2.6 b2 3.4 2.6 Expected return E(R) 13.1% 23.28% You expect that in one year the price for Stocks D and E will be $55 and $24.03, respectively. Also, stock E is expected to pay a dividend of $2.5 over the next year. What should the price of stock E be today to be consistent with the expected return levels listed in the table?

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