Question: Given the following information about Stock A: P 0 = $62.75 A = 1.3 D 1 = $2.20 paid at end of year K M

Given the following information about Stock A:

P0 = $62.75

A = 1.3

D1 = $2.20 paid at end of year KM = 11% annual

Rf = 5% annual

  1. Estimate the price of stock A at the end of the year

  1. Suppose that Stock a is combined with two other stocks as follows: Stock Proportion Beta

A

0.25

1.3

B

0.40

0.9

C

0.35

1.1

What is the beta of the portfolio of three stocks?

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