Question
One of the most important financial models is the Capital Asset Pricing Model (CAMP). It basically says that the expected return of an asset is
One of the most important financial models is the Capital Asset Pricing Model (CAMP). It basically says that the expected return of an asset is related to several factors such as the risk-free rate, the beta of the asset and the expected rate of return on the market portfolio. For your initial discussion post, choose a stock, and explain how you would come up with the expected rate of return for your stock based on the CAPM. When doing so, assume a reasonable risk-free rate, and the expected rate of the market portfolio, and you can find the beta of your stock in one of the financial websites including finance.yahoo.com. For example, the beta for IBM can be found in the following page:
https://finance.yahoo.com/quote/IBM/key-statistics/
How does one measure the beta for a stock? What does the beta of your stock say about your stock's risk? Do you think the expected return of your stock predicted by CAPM is a reasonable one? What assumptions of the CAPM make the prediction unstable or vulnerable? Please be as elaborate as you can with numerical examples.
"ITS A DISCUSSION POST SHOULD AT LEAST CONSIST OF 300 WORDS. PLEASE HELP!!!!!
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