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Required rate of return according to capm

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Reference no: EM131216909

The CIS Corporation's stocks have a beta of 2. The risk-free rate is 7.5% and the expected return on the market portfolio is 15%. The corporation presently pays a dividend of Rs.4 per share, and investors expect it to experience a growth in dividends of 10% per annum for many years to come.

  1. What is the stock's required rate of return according to CAPM?
  2. What is the stock's present market price per share, assuming this required return?
  3. What would be the required rate of return and market price per share if the beta were 0.50? (Assume that the other things stay the same.)
  4. Explain the change in required rate of return and market price per share  in part.

Reference no: EM131216909

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Required rate of return according to capm : The CIS Corporation's stocks have a beta of 2. The risk-free rate is 7.5% and the expected return on the market portfolio is 15%. The corporation presently pays a dividend of Rs.4 per share, and investors expect it to experience a growth in divide..
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