Question: The probability distribution for Rm the coming year is as follows: Probability Market Return (Rm) 5% 7% 30% 8% 30% 9% 30% 10% 5% 12%

The probability distribution for Rm the coming year is as follows:

Probability	Market Return (Rm)
5%	7%
30%	8%
30%	9%
30%	10%
5%	12%

If R_RF = 6.05% and Stock X has a beta of 2.0, an expected constant growth rate of 7 percent, and D₀ = $2, what market price gives the investor a return consistent with the stock's risk?

		$25.00
		$37.50
		$21.72
		$42.38
		$56.94

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