Question
Google common stock, which trades on the NASDAQ: The beta for Google common stock is = 1.97. Googles closing price on the market yesterday was
Google common stock, which trades on the NASDAQ: The beta for Google common stock is = 1.97. Googles closing price on the market yesterday was $186.92 per share. The current expected return on the market, based on S&P 500 index, Rm, is 14.1%, based on historical market indices. The risk-free rate, Rf, using the U.S. Treasury bill 4 week, is presently 3.62%. Using the Capital Asset Pricing Model (CAPM), in addition to the given assumptions, to answer the following questions: a) What is the expected return for Google's common stock, E(R)? b) Is Google's Beta (systematic volatility) considered greater or smaller than the markets beta, i.e., is Google common stock more volatile than the normal market volatility?
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