Suppose that the Treasury bill rate is 6% and the expected return on the market stays at 9%. Use the following information.

 

StockBeta (?)Caterpillar1.68Dow Chemical1.55Ford1.38Microsoft0.96Apple0.89Johnson & Johnson0.57Walmart0.53Campbell Soup0.33Consolidated Edison0.19Newmont0.00

 

a. Calculate the expected return from Johnson & Johnson. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Expected return            %

 

b. Find the highest expected return that is offered by one of these stocks. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Highest expected return            %

 

c. Find the lowest expected return that is offered by one of these stocks. (Do not round intermediate calculations. Enter your answer as a percent rounded to the nearest whole number.)

 

Lowest expected return            %

 

d. Would Ford offer a higher or lower expected return if the interest rate were 2% rather than 6%? Assume that the expected market return stays at 9%.

 

HigherLower 

e. Would Walmart offer a higher or lower expected return if the interest rate were 8% rather than 6%? Assume the expected market return stays at 9%.

 

HigherLower