Company ABC's stock has a beta of 2 and a standard deviation of 40%. The market portfolio has an expected return of 1.5%

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Company Abc S Stock Has A Beta Of 2 And A Standard Deviation Of 40 The Market Portfolio Has An Expected Return Of 1 5 1 (21.59 KiB) Viewed 44 times

Company ABC's stock has a beta of 2 and a standard deviation of 40%. The market portfolio has an expected return of 1.5% and Standard deviation of 10%. The risk-free rate is 1%. Company ABC has just made a dividend payment of Si/share today. The dividend will go up by 10% every year over the next two years, and then it will go up by 1% per year thereafter, (A) Find the correlation between the stock retum and the market portfolio return. (I point) NOTE: Write the cower In decímenl formes up to One decimal place Answer: 0.5 (B) Find the expected return on this stock. (1 point) NOTE Le your answer in decimal forma o no decimal places for me, you wrink nie mower %6write to Answer: 0.02 (C) What should be the price of the stock? (1 point) NOTE. Round it to the whole number (SINOT.required) Answer: 120