Question
Trying to understand this problem with steps and formulas please. Suppose that the Treasury bill rate is 5% and the expected return on the market
Trying to understand this problem with steps and formulas please.
Suppose that the Treasury bill rate is 5% and the expected return on the market stays at 9%. Use the info
Stock | Beta |
caterpillar | 1.69 |
Dow Chemical | 1.62 |
Ford | 1.41 |
Microsoft | .95 |
Apple | .94 |
Johnson & Johnson | .56 |
Walmart | .48 |
Campbell Soup | .36 |
Consolidated Edison | .20 |
Newmont | 0.00 |
a) Calcukate the expected return from Johnson & Johnson
b) Find the highest expected return that is offered by one of these stocks
c) Find the lowest expected return that is offered by one of these stocks
d) Would Ford offer a higher or lower expected return if the interest rate were 2% rather than 5% Assume that the expected market return stays at 9%
e) Would walmart offer a higher or lower expected return if the interest rate were 8% rather than 5%? assume the expected market return stays at 9%
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