Answered step by step
Verified Expert Solution
Question
1 Approved Answer
ul Pedit may be I. Assume that the average annual return on the S&P 500 index since 1926 i(12%) The average T-Bill rate 1.4%. If
ul Pedit may be I. Assume that the average annual return on the S&P 500 index since 1926 i(12%) The average T-Bill rate 1.4%. If the current T-bill rate is2%. a) What is expected return on the S&P 500 index? b) If stock J has a beta of 1.4, what is its expected rate of return using the CAPM model? c) Alternatively, analysts have estimates and ratings for stock J as follows. Stock J's current price is $50. Stock J does not pay dividend. Analyst Opinion 12 month Number of Target price Analysts Strong bu $65 60 52 45 6 4 3 2 Hold Sell Strong sell What is expected rate of return on Stock J based on analysts forecast
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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