Question
Suppose therisk-free return is 2.7%and the market portfolio has an expected return of 7.2%and a volatility of 15.4%. Merck& Co.(Ticker: MRK) stock has a 18.5%volatility
Suppose therisk-free return is 2.7%and the market portfolio has an expected return of 7.2%and a volatility of 15.4%. Merck& Co.(Ticker: MRK) stock has a 18.5%volatility and a correlation with the market of 0.064.
a. What isMerck's beta with respect to themarket?
b. Under the CAPMassumptions, what is its expectedreturn?
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
15th edition
134796551, 134796550, 978-0134796550
