Question
Question 1 If the Stock A has a beta of 2.5, the risk free rate of return is 4.0% and the expected market return is
Question 1
If the Stock A has a beta of 2.5, the risk free rate of return is 4.0% and the expected market return is 7%, calculate the expected return for Stock A using the Capital Asset Pricing Model.
Question2
If the Stock B has a beta of 2.5, the risk free rate of return is 4.0% and the expected market risk premium is 7%, calculate the expected return for Stock B using the Capital Asset Pricing Model.
Question3
Assume that the risk-free rate is 5% and the market risk premium is 6%. What is the expected return of the overall stock market? What is the cost of equity of a stock with a beta of 1.2?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
15th edition
1337671002, 978-1337395250
