Question
Here are data on two companies. The T-bill rate is 3.5% and the market risk premium is 6.5%. Company $1 Discount Store Everything $5 Forecast
Here are data on two companies. The T-bill rate is 3.5% and the market risk premium is 6.5%.
| Company | $1 Discount Store | Everything $5 | |||
| Forecast return | 12 | % | 11 | % | |
| Standard deviation of returns | 8 | % | 10 | % | |
| Beta | 1.5 | 1.0 | |||
Based on the fair return and according to the capital asset pricing model (CAPM), is each firm properly priced?
$1 Discount Store Store:
Everything $5:
according to the capital asset pricing model (CAPM), is each firm properly priced?
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The Dark Side Of Valuation
Authors: Aswath Damodaran
2nd Edition
0137126891, 9780137126897
