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What will be the current price of tilda co

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Tilda Co. stock is currently priced at $48. You expect its price in one year to be $54 and do not expect any dividends to be paid. The risk free rate is 5%, and the overall market is expected to return 10%.

Question a) What will be the current price of Tilda Co. if the expected future price remains the same but its covariance with the market triples?

Question b) Assume that the actual price is more than what you have calculated in a. What does this say about its actual return compared to what is predicted by the security market line?

Reference no: EM132493343

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