What would be the stocks price if its covariance with the


Assume that CAPM holds. Distributions Inc. is trading at $45 and the stock's expected return is 15% per year. You expect all of this return to be paid as a cash dividend; the stock price will not increase over the next year. The risk-free rate is 5% per year and the market's risk premium is 9%. What would be the stock's price if its covariance with the market portfolio were twice as high instead, but all other assumptions (including the dollar-value of the cash dividend) were the same?

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Financial Management: What would be the stocks price if its covariance with the
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