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A stock has an expected return of 10.2%, the risk-free rate 4.1% and the market risk premium is 7.2%. Calculate the beta of this stock.
- A stock has an expected return of 10.2%, the risk-free rate 4.1% and the market risk premium is 7.2%. Calculate the beta of this stock.
(3 marks)
| State of economy | Probability | Rate of returns | ||
|
|
| Stock A | Stock B | Stock C |
| Boom | 0.35 | 0.24 | 0.36 | 0.55 |
| Normal | 0.50 | 0.17 | 0.13 | 0.09 |
| Bust | 0.15 | 0 | 0.28 | 0.45 |
- Base on the table above, you invested 40% on Stock A and B and 20% on Stock C. Calculate the expected return on this portfolio.
(10 marks)
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College Accounting A Contemporary Approach
Authors: David Haddock, John Price, Michael Farina
3rd edition
77639731, 978-0077639730
