What is the expected return on this stock

Reference no: EM131318448

Suppose you expected the return on the market to be 10% and the return on the risk-free asset to be 2%. If you are considering a stock with a beta of 1.2, what is the expected return on this stock according to the security market line ? What is the theoretical problem inherent in verifying the CAPM empirically?

Reference no: EM131318448

Questions Cloud

Explain purpose of each component in the circuit : Using oscilloscope, graph the voltage for node 1 to 21 in the schematic - Explain each graph and explain purpose of each component in the circuit.

What is the value of the firm and its components : (a) What is the value of the firm and its components before and after the project addition? (b) Should the company take the project? Will it?

Compute the dupont return on operating assets : Briefly comment on profitability and trends indicated in profitability. Also comment on the difference in results between using the average balance sheet figures and year-end figures.

What could have been done to avoid the problem : What actually caused the conflict? Who was involved? Why did the conflict continue for months? What could have been done to avoid the problem?

What is the expected return on this stock : If you are considering a stock with a beta of 1.2, what is the expected return on this stock according to the security market line ? What is the theoretical problem inherent in verifying the CAPM empirically?

What is the all equity value of the investment : (a) What is the all equity value of the investment? (b) What is the added value if the company finances this project with $682,044 worth of 16% debt which requires an interest payment until maturity when the full principle is due?

Analyze the ethical implications of a counselor : Analyze the ethical implications of a counselor expressing their values to a client. Identify actions a counselor might take when confronted with clients they find difficult to treat due to differences in values/beliefs regarding one or more of the..

Analyze your position to someone who disagrees with you : Based on what you have read, do you believe that consumers should have to pay for plastic or paper bags at grocery and other stores? What arguments most influenced your decision? How would you explain your position to someone who disagrees with yo..

What is the value of convertible debenture : What is the value of convertible debenture? Assume that the investors' required rate of return on the debt component and the equity component are 13 percent and 18 percent respectively.

User Account

All Pages