Question
As new analyst of an investment bank, you are asked to calculate the required rate of returns or CAPM (capital asset pricing model) of the
As new analyst of an investment bank, you are asked to calculate the required rate of returns or CAPM (capital asset pricing model) of the following US companies.
The T-Bill (US Government short-term bond) has a 3% rate and the risk premium is 7%.
| beta | |||
| Company A | 0,32 | ||
| Company B | 0,55 | ||
| Company C | 1,23 | ||
| Company D | 1,67 | ||
| If the client is risk averse, which company would you advise him to invest in ? | |||
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International Finance A Survey
Authors: H. Kent Baker, Leigh A. Riddick
1st Edition
0199754659, 978-0199754656
