The risk-free rate is 3.9% and you believe that the S&P 500's excess return will be 9.7% over the next year. If you invest in a stock with a beta of 1.1 (and a standard deviation of 30%), what is your best guess as to its expected excess return over the next year? The expected excess return over the next year is %. (Round to two decimal places.)
The risk-free rate is 3.9% and you believe that the S&P 500's excess return will be 9.7% over the next year. If you invest in a stock with a beta of 1.1 (and a standard deviation of 30%), what is your best guess as to its expected excess return over the next year? The expected excess return over the next year is %. (Round to two decimal places.)
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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Transcribed Image Text:The risk-free rate is 3.9% and you believe that the S&P 500's excess return will be 9.7% over the next year. If you invest in a stock with a beta of 1.1 (and a standard
deviation of 30%), what is your best guess as to its expected excess return over the next year?
The expected excess return over the next year is %. (Round to two decimal places.)
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