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Find the following Betas for the companies listed below: (use www.yahoofinance.com) Assuming a risk free rate (Rf) of 2% and the Return from the market
Find the following Betas for the companies listed below: (use www.yahoofinance.com) Assuming a risk free rate (Rf) of 2% and the Return from the market (Rm) of 6.5% calculated the expected return of each company based on the Capital Asset Pricing Model. Re-order your list from the lowest beta to the highest and compare their expected return. a) Comment on your results. (Hint: Look at the grouping of the companies, and the value of betas from 0 to 0.5 , from 0.5 to 1 , from 1 to 1.25 and 1.25 and up) b) What does the value of beta tell us about a company? What does the value of beta and CAPM tell us about the risk in investing in a company
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