Question
The table below gives the end-of-year levels of the price of an ordinary share in Kamili Ltd. and of a representative Stock Exchange Index.
The table below gives the end-of-year levels of the price of an ordinary share in Kamili Ltd. and of a representative Stock Exchange Index. Kamili Ltd Share Price Sh. 150 156 162 158 170 153 Stock Exchange Index 1504 1631 1750 1690 1800 1590 Required: a) b) Calculate the beta coefficient of Kamili Ltd's ordinary shares. Ignore any dividend payments. (12 marks) Using the beta calculated in (a) above, and given a risk-free rate of 5% a year and an expected return from equities generally of 8% a year, calculate the expected rate of return on Kamili Ltd.'s ordinary shares. (3 marks)
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Intermediate Microeconomics
Authors: Hal R. Varian
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