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Raihana is reviewing her investment portfolio, which includes certain bonds and money market instruments. She has a large amount tied up in the 6-mth treasury
Raihana is reviewing her investment portfolio, which includes certain bonds and money market instruments. She has a large amount tied up in the 6-mth treasury bills (TBs) paying 2.33%. She is considering moving some of her funds from the TBs into an investment in a stock. The stock has a beta of 1.20. Raihana determines that the average return on the FBMKLCI over the last several years is 10%. If she expects a return of 14% from the stock, determine whether she should buy the stock. (5 marks)
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