Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Apply the CAPM to value the tech stocks of the table below. What are the systematic and idiosyncratic variances of each tech stock? You can

Apply the CAPM to value the tech stocks of the table below. 

 

What are the systematic and idiosyncratic variances of each tech stock?

You can assume that the latest risk-free rate is 0.08%.

     Correlations
 Market Caps (trillion)PriceExpected returnVolatilityAlphabet Amazon Apple Microsoft 
Alphabet $1.75$2,653.6420.90%40.60%10.870.750.92
Amazon $1.49$2,936.3524.50%49.20%0.8710.810.88
Apple $2.59$158.5225.40%35.20%0.750.8110.85
Microsoft $2.14$285.5926.60%39.10%0.920.880.851
S&P 500  13.80%26.80%0.870.880.910.93

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To apply the Capital Asset Pricing Model CAPM to value the tech stocks we need the following inputs ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management For Decision Makers

Authors: Peter Atrill, Paul Hurley

2nd Canadian Edition

138011605, 978-0138011604

More Books

Students also viewed these Finance questions

Question

What does the WACC for a firm tell us?

Answered: 1 week ago

Question

What is meant by organisational theory ?

Answered: 1 week ago

Question

What is meant by decentralisation of authority ?

Answered: 1 week ago

Question

Briefly explain the qualities of an able supervisor

Answered: 1 week ago

Question

Define policy making?

Answered: 1 week ago

Question

Define co-ordination?

Answered: 1 week ago

Question

Identify six common problems with goal setting.

Answered: 1 week ago

Question

explain the main theories of concentration effects,

Answered: 1 week ago

Question

discuss the sources of sport confidence,

Answered: 1 week ago