Question
The following table shows betas for several companies. Calculate each stocks expected rate of return using the CAPM. Assume the risk-free rate of interest is
The following table shows betas for several companies. Calculate each stocks expected rate of return using the CAPM. Assume the risk-free rate of interest is 9%. Use a 11% risk premium for the market portfolio.
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
| Company | beta | Cost of Capital |
|---|---|---|
| Caterpillar | 1.78 | |
| Apple | 1.42 | |
| Johnson & Johnson | .61 | |
| Consolidated Edison | .33 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
The Financialized Economy
Authors: Alexander Styhre
1st Edition
0367754568, 978-0367754563
