A stock has a beta of 11 and the expected return on the


1. A stock has a beta of 1.1 and the expected return on the market is 13%. The risk-free rate is 4.2%. What is the rate of return on the stock?

2. Utility Company pays dividends of $15 per share annually. The dividend is expected to continue indefinitely forever. The rate of return on the bond is 7%. What is the value of the common stock?

a. $1.05

b. $46.67

c. $105

d. $214.29

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Financial Management: A stock has a beta of 11 and the expected return on the
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