1. You expect to receive a $1.00 dividend the next time your stock pays dividends. If your required rate of return (RRR) on the “dog” is 20% and the growth rate is 2%, what should this stock sell for?
2. You have $80,000 to invest in stocks. You select 2 stocks: A & B. Stock A has a beta of .6, so you invest $60,000 in it. The remainder you put in Stock B which has a beta of 1.5. What is the beta of your stock portfolio?