Computation of required rate of return using capm approach

Reference no: EM1316473

Computation of required rate of return using CAPM approach

You have been scouring The Wall Street Journal looking for stocks that are \"good values\" and have calculated the expected returns for five stocks (a,b,c,d,e). Assume the risk-free rate (kRF) is 7 percent and the market risk premium (kM - kRF) is 2 percent. Which security would be the best investment? (Assume you must choose just one.)

Expected Return	Beta
a.	9.01%	1.70
b.	7.06%	0.00
c.	5.04%	-0.67
d.	8.74%	0.87
e.	11.50%	1.4

Reference no: EM1316473

Questions Cloud

Assume that a normal model can be applied : Environmental Protection Agency (EPA) fuel economy estimates for automobile models tested recently predicted a mean of 24.80 mpg and a standard deviation of 6.2mpg for highway driving. Assume that a normal model can be applied.

Find rogers'' breadeven level of sales : CVP analysis involves calculation of breakeven point in units - Find Rogers' breadeven level of sales at the level of fixed operating cost?

Preparing tables of descriptive statistics : Prepare tables of descriptive statistics (mean, median, Quartiles, IQR, and Standard Deviation) by firm for net profit margin (PROFITS). Discuss.

Among appropriate statistical certainty which the proportion : To find out the proportion of the population of likely voters who agree the statement. Could we say among appropriate statistical certainty which the proportion of the population of likely voters.

Computation of required rate of return using capm approach : Computation of required rate of return using CAPM approach and which security would be the best investment

How to compute probability value using normal distribution : X has a normal distribution with a mean of 80.0 and a standard deviation of 3.5. Find the following probabilities.

Evaluation of fixed operating cost for achieving target : Computation of fixed operating cost for achieving target profits - How large can Rogers' fixed operating costs be if he is to meet his profit target?

Find the second derivative : Find the second derivative

Confidence interval for multiple comparisons : Use a 95% confidence interval for multiple comparisons. Show your calculation by hand between Monday and Tuesday. Match your answer with Minitab output. Attach Minitab output.

User Account

All Pages