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3b) COVID19 pandemic has significant impact on stock market. Some stocks experience significant decline in prices, while prices of some stocks show upward momentum. Investors
3b) COVID19 pandemic has significant impact on stock market. Some stocks experience significant decline in prices, while prices of some stocks show upward momentum. Investors are continuously keeping their eyes on stock market to find mis-priced stocks. One of your neighbours is new in stock trading and has insufficient knowledge in financial analysis. He knows that you are studying investment analysis unit. So, he approached you with the following data and seeks your help to make investment decisions. Beta Stock Actual return (%) Market risk premium and risk-free rates are 6% and 4% respectively. A B D 11 9 13 12 1.20 1.10 1.25 0.90 i) Which model will you use for your analysis and why? ii) What will be your recommendations regarding these four stocks? You must show all relevant numerical calculations for each stock you need to make your recommendations
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