Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Using the CAPM and the internet, Estimate the required rate of return of the Amazon Company. Use the 10 year Treasury bond rate (yield) for

Using the CAPM and the internet, Estimate the required rate of return of the Amazon Company. Use the 10 year Treasury bond rate (yield) for the risk free rate and the Russell 2000 for the market rate. You can find this numbers on finance.yahoo.com, morningstar or other financial websites. Reference which website you used. Remember that the formula is r = rf + B (return on the market - rf)

Russell 2000 market info can be found at http://news.morningstar.com/index/indexReturn.html

Use the 3 year rate on the Russell 2000 TR.

The yield for the 10 year US Treasury bond can be found at http://finance.yahoo.com/market-overview/

Using the same website, put the stock symbol or try to find the company by spelling it out under quote and find the beta on the right side (a little way down the page). You don't have to quote the beta like in the risk and return chapter, just use the beta from the website.

Now you can compute your required rate of return. Please show your work. Discuss your findings.

Step by Step Solution

3.54 Rating (157 Votes )

There are 3 Steps involved in it

Step: 1

Using the CAPM and the information found at httpnewsmorningstarcomindexindexReturnhtml ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective

Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

9th Edition

1337614689, 1337614688, 9781337668262, 978-1337614689

More Books

Students also viewed these Accounting questions