Reference no: EM132314835

Question

Suppose that the Treasury bill rate is 6% and the expected return on the market stays at 9%. Use the following information.

Stock	Beta (β)
Caterpillar	1.68
Dow Chemical	1.55
Ford	1.38
Microsoft	0.96
Apple	0.89
Johnson & Johnson	0.57
Walmart	0.53
Campbell Soup	0.33
Consolidated Edison	0.19
Newmont	0.00

a. Calculate the expected return from Johnson & Johnson. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Expected return %

b. Find the highest expected return that is offered by one of these stocks. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Highest expected return %

c. Find the lowest expected return that is offered by one of these stocks. (Do not round intermediate calculations. Enter your answer as a percent rounded to the nearest whole number.)

Lowest expected return %

d. Would Ford offer a higher or lower expected return if the interest rate were 2% rather than 6%? Assume that the expected market return stays at 9%.

HigherLower

e. Would Walmart offer a higher or lower expected return if the interest rate were 8% rather than 6%? Assume the expected market return stays at 9%.

HigherLower