Monkey corporation want to buy stocks in the Goose company, Monkey financial manager says that the stock fair price is 50 dollars if the treasury bill rate is 0.1 and the covariance between the stock and the market is 0.0033 and the standard deviation of the market is 0.06 ,the market return is 0.15what is the what is the required rate of return ?
Monkey corporation want to buy stocks in the Goose company, Monkey financial manager says that the stock fair price is 50 dollars if the treasury bill rate is 0.1 and the covariance between the stock and the market is 0.0033 and the standard deviation of the market is 0.06 ,the market return is 0.15what is the what is the required rate of return ?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Risk and return
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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.
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Monkey corporation want to buy stocks in the Goose company, Monkey financial manager says that the stock fair price is 50 dollars
if the treasury bill rate is 0.1 and the covariance between the stock and the market is 0.0033 and the standard deviation of the market is 0.06 ,the market return is 0.15what is the
what is the required rate of return ?
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