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The realized returns for the market and Johnson Drugs for the last four years are given below: Year Market Johnson 1 10% 5% 2 15%
The realized returns for the market and Johnson Drugs for the last four years are given below: | ||||||||
Year | Market | Johnson | ||||||
1 | 10% | 5% | ||||||
2 | 15% | 0% | ||||||
3 | -5% | 14% | ||||||
4 | 0% | 10% | ||||||
An average stock has a required return of 12 percent, and the market risk premium is 4 percent. | ||||||||
If Johnson's expected rate of return is 8 percent, what is the difference between Johnson's | ||||||||
expected and required rates of return? |
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