What might cause betas to change over time

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Question: From the Wall Street Journal, a website such as Yahoo! Finance, or some other source, obtain a current estimate of the risk-free rate (use a 10-year Treasury bond). Use the Value Line Investment Survey or Yahoo! Finance to obtain the beta for each of the companies listed on page 186.

a. Compare the current betas to the February 27, 2015 betas given in the chapter for each of the companies.

b. What might cause betas to change over time, even in a stable economic environment?

c. Use the current betas, along with a market risk premium on stocks of 8.5%, to find the required return for each stock with the CAPM.

d. Compare and discuss your findings in part c with regard to the specific business of each company.

Reference no: EM131624347

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