The actual expected return on a stock based on estimates of future dividends and future price can be compared to the required or equilibrium return given its risk. If the expected return is greater than the required return, the stock may be an attractive investment.

a.

First calculate the expected holding-period return (HPR) on Target Corporation's stock based on its current price, its expected price, and its expected dividend.

i.	Get information for Target (enter TGT under quote search). From the Analyst Opinion page, find the range for estimated target price for the next fiscal year.
ii.	Collect information about today's price and the dividend rate. What is the company's expected dividend in dollars for the next fiscal year?
iii.	Use these inputs to calculate the range of Target's HPR for the next year.

b.

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Calculate the required return based on the capital asset pricing model (CAPM).

i.	Use a risk-free rate from Yahoo's Market Data page.
ii.	Use the beta coefficient shown in the Key Statistics page.
iii.	Calculate the historical return on a broad-based market index of your choice. You may use any time period that you deem appropriate. Your goal is to derive an estimate of the expected return on the market index for the coming year.
iv.	Use the data you've collected as inputs for the CAPM to find the required rate of return for Target Corporation.

c.

Compare the expected HPR you calculated in part (a) to the required CAPM return you calculated in part (b). What is your best judgment about the stock's current statusdo you think it is selling at an appropriate price?