If CAPM and the analysts are correct, what price SHOULD the stock be trading at...
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If CAPM and the analysts are correct, what price SHOULD the stock be trading at TODAY?
Based on your assumptions and research, should you buy the stock at $12.50? (YES OR NO).
A stock is priced today at $12.66. Analysts have a consensus view that the stock will be valued at $15.21 next year. The stock will not pay a dividend in the coming year. After a little research, you know that the stock has a beta of 1.10. The risk free rate in the economy is 4.00%, while the market risk premium is 7.00%
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