EVALUATION OF PORTFOLIO BETA AND THE REQUIRED RETURN ON STOCK The tendency of a

Question

EVALUATION OF PORTFOLIO BETA AND THE REQUIRED RETURN ON STOCK

The tendency of a stock's price to move up and down with the market is reflected in its beta coefficient. Therefore, beta is a measure of an investment's market risk, and is a key element of the CAPM.

In this part of the project, you get financial information using Yahoo!Finance (found at http://finance.yahoo.com/ )

To find a company's beta, enter the desired stock symbol and request a basic quote. Once you have the basic quote, select the "Key Statistics". Scroll down this page to find the stock's beta.

In your initial response to the topic you have to answer all 4 questions.

You are expected to make your own contribution in a main topic as well as respond with value added comments to at least two of your classmates as well as to your instructor.

From Yahoo!Finance obtain a report on any two companies.

1.What are the betas listed for these companies?

2.If you made an equal dollar investment in each stocks what would be the beta of your portfolio?

3.Apply the Capital Asset Pricing Model (CAPM) Security Market Line to estimate the required return on these two stocks. Assumptions and Data: Note that you will need the risk-free rate and the market risk premium. Assume a 5% market risk premium. To get the current yield on 10-year Treasury securities go to Finance!Yahoo

Explanation / Answer

Please paste the full info

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.