Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Below are returns on the stock A and S&P500 index. All numbers are in decimals (-0.0222 is equivalent to -2.22%). A S_P500 -0.0222 0.0032 -0.0048
Below are returns on the stock A and S&P500 index. All numbers are in decimals (-0.0222 is equivalent to -2.22%).
A | S_P500 |
-0.0222 | 0.0032 |
-0.0048 | -0.0058 |
0.1333 | 0.0434 |
0.0765 | 0.1081 |
-0.0161 | -0.0121 |
0.1250 | 0.1400 |
0.0145 | 0.0368 |
-0.0475 | -0.0454 |
0.0430 | 0.0577 |
-0.0260 | -0.1374 |
0.0071 | 0.0064 |
0.0249 | 0.0186 |
0.0850 | 0.0215 |
-0.0624 | -0.0752 |
0.0933 | 0.0365 |
0.0456 | 0.0528 |
-0.0632 | -0.0131 |
0.0450 | 0.0009 |
0.0200 | 0.0017 |
0.0280 | 0.0985 |
Suppose that the next S&P500 return will be 7%. Use the CAPM model to calculate the expected return on the stock A. Assume the risk-free rate of 1%.
Please write an answer in decimals. For example, 12.34% would be 0.1234. Also, round your answer to the fourth decimal.
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