What is the expected return on this stock

Reference no: EM131288705

Suppose you expected the return on the market to be 10% and the return on the risk-free asset to be 2%. If you are considering a stock with a beta of 1.2, what is the expected return on this stock according to the security market line ? What is the theoretical problem inherent in verifying the CAPM empirically?

Reference no: EM131288705

Questions Cloud

Explain the competing ethical principles : Explain how the research findings might influence the way psychology professionals view depression. Be sure you consider both accepting and rejecting the findings.

Why is an oligopolist more likely to be able to earn profit : Why is an oligopolist more likely to be able to earn a profit in the long run compared to a monopolistic competitive firm?

Minimum and maximum concentrations of smoke : Find the levels of income at which there is (local) minimum and maximum concentrations of smoke. (Be sure to check your second-order condition.)

Considered an indirect cost the cost of material the salary : Sam's shirts manufactures mens dress shirt. if the cost object is the production of dress shirts which of the following would be considered an indirect cost the cost of material the salary of the production manager the labor cost to sew the shirts no..

What is the expected return on this stock : what is the expected return on this stock according to the security market line ? What is the theoretical problem inherent in verifying the CAPM empirically?

How is total manufacturing cost incurred computed : The master budget begins with which of the following: Production budget Sales budget direct material purchase budget direct labor cost budget. When created the COGM statement, how is total manufacturing cost incurred computed?

What would be the cost of more butter : What would be the cost of more butter, if the economy is at point C? What would be the cost of producing more guns? How does the shape of the production possibilities curve reflect the law of increasing opportunity costs?

Straight-time depreciation on production equipment : Which of the following would be classified as a variable cost: straight-time depreciation on production equipment copy lease payment of 500 per month plus 0.01 per copy. fabric for use in quits to be produce salary of the department manager

Explain what beta represents in terms of asset pricing : If a stock's return and risk are such that this would plot above the security market line, is this stock overpriced or underpriced?

User Account

All Pages