Wells Fargo stock sells for 50 per share and has a beta of 1

Wells Fargo stock sells for $50 per share and has a beta of 1.60. Other factors being constant, if the market goes up to 15 percent, Wells Fargo’s stock will advance to

A. $62

B. $75

C. $80

D. None of the above, the correct answer is _____

Solution

Answer: A. $62

=> New Stock price = $50 + 1.60 (50 * 15%) = $62