Question
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 ...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