Risk Metrics Company is expected to pay a dividend of $3.50 in the coming year.Dividends are expected to grow at a rate of 10% per year.The risk-free rate of return is 5% and the expected return on the market portfolio is 13%.The stock is trading in the market today at a price of $90.00. What is the approximate beta of Risk Metrics's stock
A)0.8
B)1.0
C)1.1
D)1.4
E)None of the options

Question

Quizplus · Accepted Answer

k = 13.9%; 13.9 = 5% + b(13% - 5%) = 1.11.

Risk Metrics Company Is Expected to Pay a Dividend of $3.50