Question
Predict stock returns as of 1* September 2023 (right after your original 5-year sample period) using the estimated beta (B) coefficients and realised market risk
Predict stock returns as of 1* September 2023 (right after your original 5-year
sample period) using the estimated beta (B) coefficients and realised market risk premium as of 1* September 2023. Compare realised stock retuns and their predicted retums on 1st September 2023 for both stocks. Plot both realised and predicted retums of both stocks on the plane of betas (, horizontal axis) and returns (vertical axis). Draw a security market line (SML) on the same plane. Compare realised retuns and the SML onthe plane andcalculate Jenson's alpha of each stock. Interpret the results.Would you like to teach me problem solving process?
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