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Using the capm and an assumption about market equilibrium

Suppose that stock L sells for $75 today and is expected to pay dividend of 2.00 at the end of one year. Firm L's beta is 1.30 the market expected return is 13% and the riskless return is 5%. Using the CAPM and an assumption about market equilibrium forecaset Firm L's price in one year.

93.01

84.55

73.56

98.08

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Finance Basics: Using the capm and an assumption about market equilibrium

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Finance Basics: Using the capm and an assumption about market equilibrium

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