Required return of the overall stock market

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Reference no: EM131045180

Question 1- The store has a beta of 0.8. The yield for a 10-year T-bond is 6%. The required return of the overall stock market is 10%. What is the estimated cost of common equity. (Use the CAPM model).

Question 2- A stock you want to invest in recently paid a 2 dollar dividend. The dividend is expected to grow at a 5% constant rate forever. Assuming you want to earn 10% on this investment, what price should you pay for this stock?

Reference no: EM131045180

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