Calculate the required indicate by the capital asset pricing

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Reference no: EM132423531

Fred Alberts Rookie Questions

  1. For each stock listed, calculate the required return as indicated by the Capital Asset Pricing Model (CAPM).
  2. Calculate the value of each stock share using the constant growth formula.
  3. Compare the values you calculated to each of the market prices for the top twenty stock picks. Are your calculations close approximations of the market price? Why do you think they are different?
  4. As noted, Bettertrade services provided a list of top 20 stock picks. Beyond the current price, dividend, dividend growth rate, and Beta for each stock, what additional measurements or information would you require to provide detailed advice to Mr. Alberts related to these 20 investments?
  5. Consider the calculations you have made regarding the individual Top 20 Stock List, and the efficiency of the market. How would you advise Mr. Alberts to invest his money for the long-term (more than 10 years)? Should he consider any of these 20 stocks?
  • Considering your answer to question 5 (which may have demonstrated limited options), and consider additional investments. Specifically, consider our discussions and our readings related to diversification and investments as you evaluate recommendations. Select four specific investment options (with ticker symbol) and provide a descriptive rationale for each of your four selected recommendations.

Attachment:- CAPM.rar

Reference no: EM132423531

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