Genting Berhad is a Malaysian conglomerate with holdings in plantations and tourist resorts. The beta estimated for

Question:

Genting Berhad is a Malaysian conglomerate with holdings in plantations and tourist resorts. The beta estimated for the firm, relative to the Malaysian stock exchange, is 1.15, and the longterm local currency risk free rate in Malaysia is 11.5%.

a. Estimate the expected return on the stock in the local currency.

b. If you were an international investor, what concerns (if any) would you have about using the beta estimated relative to the Malaysian index? If you do, how would you modify the beta?

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...