Question
Betas and Expected Stock Returns. You can find estimates of stock betas by logging on to finance.yahoo.com and looking at a companys profile. Try comparing
Betas and Expected Stock Returns. You can find estimates of stock betas by logging on to finance.yahoo.com and looking at a companys profile. Try comparing the stock betas of Google (GOOG), The Home Depot (HD), Du Pont (DD), Altria Group (MO), and Caterpillar (CAT). Once you have read Section 12.3, use the capital asset pricing model to estimate the expected return for each of these stocks. You will need a figure for the current Treasury bill rate. You can find this also on finance.yahoo.com by clicking on Bonds Rates. Assume for your estimates a market risk premium of 7%
Company | Stock Beta |
Google (GOOG) | 0.94 |
The Home Depot (HD) | 1.07 |
Dupont (DD) | 1.82 |
Altria (MO) | .50 |
Caterpillar (CAT | 1.63 |
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