Betas and expected stock returns

Assignment Help Financial Management

Reference no: EM131176435

Betas and Expected Stock Returns. You can find estimates of stock betas by logging on to finance.yahoo.com and looking at a company's profile. Try comparing the stock betas of Google (GOOG), The Home Depot (HD), Du Pont (DD), Altria Group (MO), and Caterpillar (CAT). Once you have read section 12.3, use the capital asset pricing model to estimate the expected return for each of these stocks. You will need a figure for the current Treasury bill rate. You can find this also on finance.yahoo.com by clicking on bonds-rates. Assume for your estimates a market risk premium of 7%.

Log on to www.fidelity.com and look at the list of mutual funds that are managed by Fidelity. Some of these funds, such as the Aggressive Growth Fund, appear from their names to be high-risk. Others, such as the Balanced Fund, appear to be low-risk. Pick several apparent high- and low-risk funds and then check whether their betas really do match the fund's name.

Reference no: EM131176435

Questions Cloud

Electronics is midsized electronics manufacturer : Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. Over the years, the company expanded into manufacturing and is now a reputable manufact..

Save any money between today and retirement : Now assume that you just got a call from your rich Uncle Dylan and he is going to give you a large sum of money for your birthday today. how much money does Uncle "D"need to give you today so that you would not have to save any money between today an..

Determine whether the investment plan is viable or not : A corporation plans to invest in a small project which costs a cone-time expenditure of $600,000 at year 0 and offers an annual return of $160,000 each in the next five years. It intends to finance this project by borrowing from a local bank which re..

What is the new par value per share and dividend per share : The company with the common equity accounts shown here has declared a 5-for-one stock split when the market value of its stock is $33 per share. The firm’s 75-cent per share cash dividend on the new (postsplit) shares represents an increase of 20 per..

Betas and expected stock returns : Betas and Expected Stock Returns. You can find estimates of stock betas by logging on to finance.yahoo.com and looking at a company's profile. Try comparing the stock betas of Google (GOOG), The Home Depot (HD), Du Pont (DD), Altria Group (MO), and C..

What is value of the firm under each of two proposed plans : DAR Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 180,000 shares of stock outstanding. Under Plan II, there would be 130,000 shares of stock o..

Should the project be accepted or rejected : Revenues generated by a new product are forecast as follows: Year Revenue 1 $40,000 2 30,000 3 20,000 4 10,000 5 -0- no sales after year 4 Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 20% of..

What is the return on equity and return on assets : Keller Cosmetics maintains an operating profit margin of 8.60% and a sales-to-assets ratio of 3.10. It has assets of $620,000 and equity of $420,000. Interest payments are $42,000 and the tax rate is 35%. a. What is the return on assets? What is the ..

Considering two potential investments : You are considering two potential investments. One is an established company with a history of consistent earnings growth, while the other is a new IPO with a short track record. You think that the stock of both companies will be worth $100 in three ..

User Account

All Pages