What will be new equilibrium price

Reference no: EM131936558

Question: Assume that the CAPM holds. Cella, Inc stock is currently trading at $50 per share and the security's expected return is 15% per year. You expect all of this return to be paid as a cash dividend; no price 1 increase is expected. The risk-free rate is 5% per year and the market's risk premium is 9%. What will be Cella, Inc's new equilibrium price if its covariance with the market portfolio doubles, but everything else (including the dollar-value of the cash dividend) remains the same?

Reference no: EM131936558

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