Question 31: An analyst has assembled the following information regarding Net-Zone Incorporated and the market in general: Net-Zone dividend (paid yesterday) $2.15 per share Net-Zone expected dividend...

Extracted text: Question 31: An analyst has assembled the following information regarding Net-Zone Incorporated and the market in general: Net-Zone dividend (paid yesterday) $2.15 per share Net-Zone expected dividend growth 3% per year Net-Zone expected ROE 16.2% Net-Zone beta 1.8 Net Zone long-term bond yield 8.6% 10.7% Expected return on S&P 500 Index 30-day Treasury bill yield 10-year Treasury bond yield 3.5% 4.8% When reviewing the data provided by the analyst, the CFO of Net-Zone was surprised by the value of the company's beta. The CFO understands that the beta value is an indicator of risk, and investors need to be compensated for their risk of investing. The company's current stock price is just under $17 per share, which the CFO believes is too low considering the company's increased profit margins. If the CFO believes the stock price should be no less than $25 per share, and assuming the CFO is correct, that would imply that the company's beta is a) 1.22 b) 1.19 c) 1.13 d) 1.16