CAPM required return for both stocks-Sigma and Omega

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Reference no: EM131580222

Consider the information below. Question has 25 points Stock Riskless Return Market Return Beta Implied Return Sigma 2.50% 13.50% 0.8 18% Omega 2.50% 13.50% 1.2 9%

A. Calculate the CAPM required return for both stocks. Sigma: Omega:

B. Calculate the excess return, alpha, for both stock. Sigma: Omega:

C. Which one would you buy? Explain.

Reference no: EM131580222

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