Question
Stock A beta is 1.2 and the risk premium of the stock in the same industry is 5.5%. If the risk free rate of return
Stock A beta is 1.2 and the risk premium of the stock in the same industry is 5.5%. If the risk free rate of return is 3.5%, calculate the expected return on stock A.
2)
- Given the following stock return over a 5-year period, calculate the geometric return.
Year | 2013 | 2014 | 2015 | 2016 | 2017 |
Return | 10% | -2% | 5% | 8% | 11% |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
1 To calculate the expected return on Stock A well use the Capital Asset Pricing Model CAPM formula ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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Get StartedRecommended Textbook for
Corporate Financial Management
Authors: Glen Arnold
5th edition
978-1292178066, 129217806X, 273758837, 978-0273758839
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