You are thinking of buying a stock priced at $98 per share. Assume that the risk-free rate is about 5.4% and the market risk premium is 5.3%. If you think the stock will rise to $124 per share by the end of the year, at which time it will pay a $1.54 dividend, what beta would it need to have for this expectation to be consistent with the CAPM? The beta is (Round to two decimal places.)

You are thinking of buying a stock priced at $98 per share. Assume that the risk-free rate is about 5.4% and the market risk premium is 5.3%. If you think the stock will rise to $124 per share by the end of the year, at which time it will pay a $1.54 dividend, what beta would it need to have for this expectation to be consistent with the CAPM? The beta is (Round to two decimal places.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 4P: An analyst has modeled the stock of a company using the Fama-French three-factor model. The market...

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1) see pic