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Ir. Moremi who works as an Analyst at Capital Securities, have been monitoring the performance of stocks of arclays, Sechaba, and Cresta and has compiled
Ir. Moremi who works as an Analyst at Capital Securities, have been monitoring the performance of stocks of arclays, Sechaba, and Cresta and has compiled the following: a) The market's standard deviation is 18%. Using the risk-free rate of 2.0% and an expected market return of 9.5%, what is the expected return of each stock? [9 marks] b) Based on your calculations in (a) describe the relationship between a firm's return and its beta. [2 marks]
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