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The stock of Box Limited performs well relative to other stocks during recessionary periods. The stock of Cox Limited, on the other hand, does well
The stock of Box Limited performs well relative to other stocks during recessionary periods. The stock of Cox Limited, on the other hand, does well during growth periods. Both the stocks are currently selling for ? 100 per share. You assess the rupee return (dividend plus price) of these stocks for the next year as follows: Economic Condition High growth Low growth Stagnation Recession Probability 0.3 0.4 0.2 0.1 Return on Box's stock 100 110 120 140 Return on Cox's stock 150 130 90 60 5. 6. Calculate the expected return and standard deviation of investing: ?1,000 in the equity stock of Box Limited. 71,000 in the equity stock of Cox Limited. If risk free rate is 6% and market risk premium is 12% and beta of the security is 1.5. What is the expected return of the security under CAPM? What would be
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