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Suppose the beta of the stock of Microsoft, Inc., is Bmsft = 1.45. If rf=4 percent and rM = 9 percent, what is the equilibrium
Suppose the beta of the stock of Microsoft, Inc., is Bmsft = 1.45. If rf=4 percent and rM = 9 percent, what is the equilibrium expected return on Microsoft stock, rmsft, according to the CAPM? As an analyst of the firms in the high-tech industry, you expect Microsoft to provide a return of 10 percent over the next year. Comparing your estimate with the equilibrium expected return on Microsoft that you just calculated, would you recommend to your investors that they buy Microsoft Stock
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