Question
In previous chapters we learned about using various interest rates in finance. In Chapter 5, we used interest to discount future cash flow, in Chapter
In previous chapters we learned about using various interest rates in finance. In Chapter 5, we used interest to discount future cash flow, in Chapter 7 we evaluated bond coupons and yield to maturity. Describe and contrast in a few sentences "expected return" on stocks to previous concepts regarding returns on investments. Also list the two components of stock return.
What do we use the Capital Asset Pricing Model ("CAPM") for? What does it tell us?
Re Apple, Inc. -
Look up Apple's Beta. Using Apple's beta, and if the market return on all stocks is 10% and the risk free rate of return is 1%, what is the "expected return" for Apple using CAPM? Show your work.
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