Question: Your expected return on a stock you are evaluating is 10%. You know the following about the company and the general economy / market: The

Your expected return on a stock you are evaluating is 10%. You know the following about the company and the general economy / market: The average market return for stocks has been 7%. U.S. Treasury Bonds are paying 5%. The companys stock price is $25. Your bank would charge 8% for a loan. The last dividend was $1.50 per share. The companys Beta is 1.2.

What is the Required Rate of Return on this stock?

Should you buy this stock?

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