Question: Problem #5 (7 marks) You are considering purchasing some shares of CNB Inc. to add to your portfolio. The stock is currently quoted at $64

Problem #5 (7 marks) You are considering purchasing some shares of CNB Inc. to add to your portfolio. The stock is currently quoted at $64 in the market. Your research has provided you with the following information: o The stock of recently paid a dividend of $2.29 per share. o Dividends are expected to grow at a rate of 1.25% forever. o Based on past returns, the standard deviation of CNB Inc. is 16%. o The stock has a correlation of 30 with returns to the overall market. o The S&P/TSX Composite Index has a standard deviation of 12%. Historically, the market has returned 9.25% more than T-bills in an average year. o The current yield on T-Bills is 1%. Based on your analysis, should you purchase shares of CNB? Show your work

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