The following four factors were identifies and later used to explain the return on a stock and level of sensitivity GDP growth: β=0.6, Rp=4% Inflation rate: β=0.6, RP=5% Gold Prices: β=0.8, RP=6% Standard and Poor’s 500 Index Returns: β=2.5, RP=8% The risk free rate is 6% Using the APT formula, calculate the expected rate of returns on the stock
The following four factors were identifies and later used to explain the return on a stock and level of sensitivity GDP growth: β=0.6, Rp=4% Inflation rate: β=0.6, RP=5% Gold Prices: β=0.8, RP=6% Standard and Poor’s 500 Index Returns: β=2.5, RP=8% The risk free rate is 6% Using the APT formula, calculate the expected rate of returns on the stock
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 14P: You have observed the following returns over time: Assume that the risk-free rate is 6% and the...
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The following four factors were identifies and later used to explain the return on a stock and level of sensitivity
GDP growth: β=0.6, Rp=4%
Inflation rate: β=0.6, RP=5%
Gold Prices: β=0.8, RP=6%
Standard and Poor’s 500 Index Returns: β=2.5, RP=8%
The risk free rate is 6%
Using the APT formula, calculate the expected
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