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Steadman Consulting Group (SCG) has established that the return of The East African Breweries (EABL) Itd the stock is influenced by the change in inflation
Steadman Consulting Group (SCG) has established that the return of The East African Breweries (EABL) Itd the stock is influenced by the change in inflation rate, interest rate. NSE 20-share index, and industrial production. They have generated the forecasts and actual data for these factors and their respective betas for the year 2015 as follows: Factor Beta Expected value %) Actual value (%) inflation 0.45 8.00 9.75 Interest rate 0.80 10.00 11.50 NSE index 1.60 8.50 10.50 Industrial production 1.90 11.00 10.50 An investor is considering making an investment in the shares of EABL ltd. The risk-free anticipated) rate of return is 11%. Required: Calculate the total return on the share using Arbitrage Pricing model As a senior financial analyst of an investment bank, you are charged with the responsibility of estimating the expected returns of various securities. One of the securities you want to estimale ils expected return is Alpha Steel Works Lid
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