Suppose you are considering buying a stock. The stock is currently trading for $30. You expect...

Transcribed Image Text:

Suppose you are considering buying a stock. The stock is currently trading for $30. You expect the price in one year to be $30.50 and it will pay a dividend of $0.25. You estimate the stock's beta at -0.2, the risk-free rate at 5%, and the expected return on the market at 10%. According to the CAPM, should you consider purchasing this stock? LO3 O The intrinsic value is $33.33. The current price $30. You should not consider buying the stock. O The intrinsic value is $30. The current price should be $29.57. You should consider buying the stock. O The intrinsic value is $29.57. The current price is $30. You should not consider buying the stock. O The intrinsic value is $29.57. The current price $30. You should consider buying the stock. Suppose you are considering buying a stock. The stock is currently trading for $30. You expect the price in one year to be $30.50 and it will pay a dividend of $0.25. You estimate the stock's beta at -0.2, the risk-free rate at 5%, and the expected return on the market at 10%. According to the CAPM, should you consider purchasing this stock? LO3 O The intrinsic value is $33.33. The current price $30. You should not consider buying the stock. O The intrinsic value is $30. The current price should be $29.57. You should consider buying the stock. O The intrinsic value is $29.57. The current price is $30. You should not consider buying the stock. O The intrinsic value is $29.57. The current price $30. You should consider buying the stock.