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 6%. Use a 8% 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 | 1.66 | % | |
| Apple | 1.30 | % | |
| Johnson & Johnson | 0.49 | % | |
| Consolidated Edison | 0.21 | % |
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Money Banking And Financial Markets
Authors: Stephen Cecchetti, Kermit Schoenholtz
6th Edition
1260226786, 9781260226782
