Question
You are analyzing a stock that has a beta of 1.20. The risk-free rate is 5.0 % and you estimate the market risk premium to
You are analyzing a stock that has a beta of 1.20. The risk-free rate is 5.0 % and you estimate the market risk premium to be 6.0 %. If you expect the stock to have a return of 11.0 % over the next year, should you buy it? Why or why not?
What is the expected return according to the CAPM _____%. (Round to two decimal places.)
Should you buy the stock?Yes or No
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How To Understand Business Finance
Authors: Bob Cinnamon, Brian Helweg-Larsen
2nd Edition
0749460202, 978-0749460204
