Compare expected stock returns to the actual annual returns

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Reference no: EM131328821

Determine whether the stock of Hershey Foods (ticker: HSY) was mispriced (either underpriced or overpriced) at any time over the last five years. Assume that the beta for Hershey Foods stayed constant over the last five years and use the latest available beta.

Further, assume that the S&P 500 Composite Index (DSMnemonic: S&PCOMP) proxies for the market portfolio and calculate the annual returns for the index over the last five years.

You can access the three month T-bill yields from Yahoo! Finance (https://fi nance.yahoo.com).

Use the Capital Asset Pricing Model (CAPM) to estimate the expected annual stock returns for Hershey Foods for each year. Compare the expected stock returns to the actual annual returns for each year and determine if the stock was mispriced.

Reference no: EM131328821

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