1. A stock has a beta of 1.1 and the expected return on the market is 13%. The risk-free rate is 4.2%. What is the rate of return on the stock?
2. Utility Company pays dividends of $15 per share annually. The dividend is expected to continue indefinitely forever. The rate of return on the bond is 7%. What is the value of the common stock?
a. $1.05
b. $46.67
c. $105
d. $214.29