Question
The risk premium for exposure to aluminum commodity prices is 4% and the company has a beta relative to aluminum commodity prices of 0.6. The
The risk premium for exposure to aluminum commodity prices is 4% and the company has a beta relative to aluminum commodity prices of 0.6. The risk premium for exposure to GDP variations is 6%, and the company has a beta relative to GDP of 1.2.
If the risk-free rate is 4%, what is the expected return on this stock?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the expected return on the stock using the Capital Asset Pricing Model CAPM you can use ...
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
Essentials Of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
7th Edition
0073368717, 978-0073368719
