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Stock ABC has a beta of 1.4 and the standard deviation of its returns is 30%.The market risk premium is 5% and the risk-free rate
Stock ABC has a beta of 1.4 and the standard deviation of its returns is 30%.The market risk premium is 5% and the risk-free rate is 3%.
- What is the expected return for the stock?
- What are the expected return and standard deviation for a portfolio that is equally invested in the stock and the risk-free asset?
- If you forecast that next year stock ABC will have return of 10%.Would you buy it?Why or why not?
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Forecasting Methods And Applications
Authors: Spyros G. Makridakis, Steven C. Wheelwright, Rob J Hyndman
3rd Edition
0471532339, 9780471532330
