What is the stock required rate of return according to capm

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ABC corporation has a beta of 2. The risk-free rate is 9.9 percent and teh expected return on the market portfolio is 13 percent. The company currently pays a dividend of $1 a share, and investors expect it to experience a growth in dividends of 5 percent per annum.

Question 1: What is the stock's required rate of return according to CAPM?

Question 2: What is the stock's present market price per share, assuming this required return? Explain the answer

Question 3: What would happen to the required return and to market price per share if the beta were 3.80? (assume that all else stays the same.)

Reference no: EM132569937

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