Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following table shows the sensitivity of four stocks to the three FamaFrench factors. Assume the interest rate is 5%, the expected risk premium on
The following table shows the sensitivity of four stocks to the three FamaFrench factors. Assume the interest rate is 5%, the expected risk premium on the market is 8%, the expected risk premium on the size factor is 3.5%, and the expected risk premium on the book-to-market factor is 5.6%.
Ford | Walmart | Citigroup | Apple | |
Market | 1.28 | 0.62 | 1.09 | 1.29 |
Size | 0.11 | 0.43 | 0.03 | 0.63 |
Book-to-market | 0.80 | 0.21 | 0.89 | 0.68 |
Calculate the expected return on each stock. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
|
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