Suppose the yield on short term government securities (perceived to be risk free) is about 4 Suppose also that the expected return required by the market for a portfolio with a beta of 1 is 12 According to the capital asset pricing model a What is the expected return on the market portfolio b What ...

a Since the market portfolio by definition has a beta of 10 its expected rate of return is 12 b ...

Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. Suppose also that

Question:

Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. Suppose also that the required by the market for a with a beta of 1 is 12%. According to the capital asset pricing model:
a. What is the on the market What would be the on a zero-beta stock?
c. Suppose you consider buying a share of stock at a price of $40. The stock is expected to pay a of $3 next year and to sell then for $41. The stock risk has been evaluated at β = −.5. Is the stock overpriced or underpriced?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...