Stock beta = 0.5 Market risk premium = 0.06 or 6% Risk free rate = 0.02 or
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Question:
Stock beta = 0.5
Market risk premium = 0.06 or 6%
Risk free rate = 0.02 or 2%
Which of the following is NOT correct?
a.The market portfolio's total required return is 8% pa.
b.The stock's required total return is 5% pa and this is also its expected total future return if it's fairly priced.
c.If the market portfolio suddenly fell by 1% in the last 5 minutes, then the stock's price would be expected to fall by 0.5% over that same short time.
d.If the market portfolio's total return was 10% over the last year, the stock's total historical return is expected to be 5% over the same one year period.
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