I am currently working on some financial problems and accidentally asked more questions than permitted on my first submission. Here I have attached two other questions I need help setting up and solving for 3) what is the expected return of the three stock portfolios described below? common stock market value expected return ando inc 95000 12.% bee co. 32,000 8.75% cool inc. 65000 17.7% 4) the expected return for a stock, calculated using the CAPM is 10.5%. The market free return is 9.5% and the beta of the stock is 1.50. calculate the implied risk-free rate
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
I am currently working on some financial problems and accidentally asked more questions than permitted on my first submission. Here I have attached two other questions I need help setting up and solving for
3) what is the expected return of the three stock portfolios described below?
| common stock | market value | expected return |
| ando inc | 95000 | 12.% |
| bee co. | 32,000 | 8.75% |
| cool inc. | 65000 | 17.7% |
4) the expected return for a stock, calculated using the
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 3 images
