Question
A stock has a beta of 1.2 and an expected return of 11%. The risk free rate is 2% and the expected return on the
A stock has a beta of 1.2 and an expected return of 11%. The risk free rate is 2% and the expected return on the market portfolio is 12%. How much better (or worse) is the expected return on the stock compared to what it should be according to the CAPM? (Answer is -3.0)
Enter answer in percents, accurate to two decimal places.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Handbook Of Financial Risk Management
Authors: Thierry Roncalli
1st Edition
1138501875, 978-1138501874
