What is the expected excess return to sears

Reference no: EM13925604

1. If the long-term expected excess return to the S&P 500 index is 7 percent per year, what is the expected excess return to Sears?

2. Assume that residual returns are uncorrelated across stocks. Stock A has a beta of 1.15 and a volatility of 35 percent. Stock B has a beta of 0.95 and a volatility of 33 percent. If the market volatility is 20 percent, what is the correlation of stock A with stock B? Which stock has higher residual volatility?

Reference no: EM13925604

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