Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following table shows the sensitivity of four stocks to the three Fama?French factors. Assume that the interest rate is 3%, the expected risk premium
The following table shows the sensitivity of four stocks to the three Fama?French factors. Assume that the interest rate is 3%, the expected risk premium on the market is 6%, the expected risk premium on the size factor is 3.1%, and the expected risk premium on the book-to-market factor is 4.1%. |
Boeing | Johnson & Johnson | Dow Chemical | ||
Market | 1.35 | 0.86 | 1.21 | 1.62 |
Size | ?0.70 | ?0.11 | 0.47 | ?0.38 |
Book-to-market | 0.63 | ?0.16 | 1.86 | ?1.37 |
Calculate the expected return on each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
Answer:
Expected Return | |
Boeing | % |
Johnson & Johnson | % |
Dow Chemical | % |
% | |
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