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Compute the reasonable return

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Use the CAPM to compute the reasonable return for each of these fashion related stocks. 

  1. Use 0.80% as the risk free rate of return use 5.0% as the market rate of return. Retrieve beta from Yahoo Finance at https://finance.yahoo.com/.
    1. PVH Corp (PVH)
    2. Coty (COTY)
    3. Guess? (GES)
  2. Use the CAPM to compute the reasonable return for each of these stocks.  Use risk free rate of return and the market rate of return given in #1, above.
    1. Coca Cola (KO)
    2. Walmart (WMT)
    3. McDonald's (MCD)
  3. Why do the returns you computed above represent
    1. a reasonable (or fair) return for each stock?
  4. What do you notice about the pattern or trend of returns for the fashion companies (in #1) as compare to those of the non-fashion companies (in #2)?  Why does that occur?  Does that make sense in terms of the line of business of the companies in the respective groups?

Reference no: EM133072181

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