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6. Construct a graph of the Security Market Line given by the parameters in #5. Point out the SML returns you calculated in #5
6. Construct a graph of the Security Market Line given by the parameters in #5. Point out the SML returns you calculated in #5 on your SML. Also, find and plot IBM's and Netflix's expected returns from the information given below gathered from their recent Yahoo Finance stock quotes against each stock's beta on your SML graph. Would you recommend buying IBM and/or Netflix based on this information? Explain your answers. Note: you are evaluating each stock individually, not in comparison in one another. Stock IBM Netflix $374.59 Current Price $128.10 Estimated Price 1 year from now $143.47 $509.50 Annual Expected Dividend (D1) $6.56 $0.00
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Fundamentals of Financial Management
Authors: Eugene F. Brigham
Concise 9th Edition
1305635937, 1305635930, 978-1305635937
