Question: Use the chart to answer the questions Year Return 1 2% 2 -6% 3 -1% 4 14% 5 -1% 6 5% What is the average

Use the chart to answer the questions

Year Return

1 2%

2 -6%

3 -1%

4 14%

5 -1%

6 5%

What is the average return on this stock?

What is the standard deviation of the annual returns?

What is the expected return on a stock, given the Beta is 1.2, the risk-free rate is 2% and the Market risk premium is 6%?

What is the most you should pay for a share of common stock that just paid a dividend of $1.68 if rate of return is 10% and you expect dividends to increase at a constant rate of 2%?

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