Confusion Corp is expected to pay a dividend of $2 in the upcoming year. The risk-free rate of return is 4%, and the expected return on the market portfolio is 14%. Analysts expect the price of Confusion Corp shares to be $22 a year from now. The beta of Confusion Corp's stock is 1.25. The market's required rate of return on Confusion's stock is
A) 14.0%.
B) 17.5%.
C) 16.5%.
D) 15.25%.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The Answer of Confusion Corp is expected to pay a dividend of $2 in the upcoming year. The risk-free rate of return is 4%, and the expected return on the market portfolio is 14%. Analysts expect the price of Confusion Corp shares to be $22 a year from now. The beta of Confusion Corp's stock is 1.25. The market's required rate of return on Confusion's stock is
A) 14.0%.
B) 17.5%.
C) 16.5%.
D) 15.25%.
E) None of the options are correct.

Confusion Corp Is Expected to Pay a Dividend of $2