Q5.4 From the Wall Street Journal, a Web site such as Yahoo! Finance (finance.yahoo.com), or some other

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Q5.4 From the Wall Street Journal, a Web site such as Yahoo! Finance (finance.yahoo.com), or some other source, obtain a current estimate of the risk-free rate (use a 10-year Treasury bond). Use the Value Line Investment Survey or Yahoo! Finance to obtain the beta for each of the com- panies listed on page 177.

a. Compare the current betas to the August 2009 betas given in the chapter for each of the companies.

b. What might cause betas to change over time, even in a stable economic environment?

c. Use the current betas, along with a market risk premium on stocks of 8.5%, to find the required return for each stock with the capital asset pricing model (CAPM).

d. Compare and discuss your findings in part c with regard to the specific business that each company is in.

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Fundamentals Of Investing

ISBN: 9780136117049

11th Edition

Authors: Lawrence J. Gitman, Michael D. Joehnk, Scott B. Smart, Scott J. Smart

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