A stock is estimated to have a covariance with the market of 0.45. For the coming period, the market expected return is 10%, the market variance is 0.60 and the market risk-premium is 5%. If the stock is currently trading at RM2.00, use to CAPM to calculate the future price of the stock at the end of the period.
A stock is estimated to have a covariance with the market of 0.45. For the coming period, the market expected return is 10%, the market variance is 0.60 and the market risk-premium is 5%. If the stock is currently trading at RM2.00, use to CAPM to calculate the future price of the stock at the end of the period.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter3: Risk And Return: Part Ii
Section: Chapter Questions
Problem 1P: The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market...
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A stock is estimated to have a covariance with the market of 0.45. For the coming period, the market expected return is 10%, the market variance is 0.60 and the market risk-premium is 5%. If the stock is currently trading at RM2.00, use to CAPM to calculate the future price of the stock at the end of the period.
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