Homework answers / question archive / You consider buying a share of stock at a price of $25

You consider buying a share of stock at a price of $25

Finance

Share With

You consider buying a share of stock at a price of $25. The stock is expected to pay a dividend of $1 next year, and your advisory service tells you that you can expect to sell the stock in 1 year for $29. The stock's beta is 1.5, risk free rate is 4%, and Expected Market Return is 15%. What is the stock's alpha?