Calculate the return suitable for a share of common stock, Financial Management

Assignment Help:

Given that risk-averse investors demand more return for taking on much more risk while they invest, how much more return is suitable for, say, a share of common stock, than is suitable for a Treasury bill?

Even though we know that the risk-return relationship is positive, the question of much more return is appropriate for a given degree of risk is particularly difficult.  Unluckily, no one knows the answer for sure.  One famous model employed to calculate the required rate of return of an investment, given its degree of risk, is the Capital Asset Pricing Model that is abbreviated as CAPM.


Related Discussions:- Calculate the return suitable for a share of common stock

Buying and selling securities, Buying and Selling Securities One of the k...

Buying and Selling Securities One of the key features that may occur while investing in financial markets is that sometimes investors overlook the essential factors they should c

Prices and yields, Prices and Yields The face value of the government s...

Prices and Yields The face value of the government security is Rs.100 or Rs.1,000. Earlier, that is, before 1950s the government bonds were issued at a discount. There was no f

NPV calc, Capital cost of product a is ? 5 crores and initial capital cost ...

Capital cost of product a is ? 5 crores and initial capital cost of product b is ? 3 crores. Life of product a is 30 years and life of product b is 10 years . The difference in ini

Operating cycle, Explain the operating cycle of a vegetable growing busines...

Explain the operating cycle of a vegetable growing business

Food and beverage industry averages, #What are the food and beverages indus...

#What are the food and beverages industry financial ratios for 2011,2010,2009? 1. Liquidity(current/quick), Asset Management(Inventory Turnover, total assets turnover),Debt Menagem

Cost of capital, what is the major value of the weighted cost of capital ca...

what is the major value of the weighted cost of capital calculation for the firm?

How working capital affect incremental cash flow estimation, How and why do...

How and why does working capital influence the incremental cash flow estimation for a planned large capital budgeting project?  Explain. Many large projects need additional worki

Working capital based on operating cycle, Q. Working Capital Based on Opera...

Q. Working Capital Based on Operating Cycle? The concept of operating cycle, helps determining The time scale over which the current assets are maintained. The operating cycle

What is the basic approach of the financial management, Q. What is the basi...

Q. What is the basic Approach of the financial management ? 1) The first approach view finance as to providing the funds needed by a business on the most suitable terms. This ap

Calculations and graphing cumulative returns, Monthly Returns: You now nee...

Monthly Returns: You now need to calculate the monthly "periodic" returns for all three stocks and the S&P index.  Adapting the holding period return formula (End - Beg) / Beg for

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd