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Average 3.688823529 6.627941176 8203.67500000 Stndrd Dev 1.143595375 0.976465051 1824.601967 Suppose that you use the three average returns per annum calculated in above as the estimates
Average | 3.688823529 | 6.627941176 | 8203.67500000 | |
Stndrd Dev | 1.143595375 | 0.976465051 | 1824.601967 |
Suppose that you use the three average returns per annum calculated in above as the estimates of the expected returns for the two stocks and market portfolio, respectively. Suppose that the risk-free rate is 0.8% per annum.
Plot a risk-return graph with beta on the x-axis and returns on the y-axis, which shows the Security Market Line, the market portfolio, and the actual returns of the two stocks.
Determine the fair expected returns for the two stocks according to CAPM
Discuss your findings
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