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Using the risk-free rate of 2%, and the 7.5% as market return, calculate the CAPM (Capital Asset Pricing Model) for DELL. You can find the
Using the risk-free rate of 2%, and the 7.5% as market return, calculate the CAPM (Capital Asset Pricing Model) for DELL. You can find the beta of the stock on the same quote page as you found the P/E ratio above. What does this assigned beta tell you about the stock? What is the required rate of return calculated using the CAPM model? Does this seem to be an attainable return and is the investment worth the risk?
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