Based on Capital Asset Pricing Model (CAPM), calculate the return on market portfolio if the Nestle stock beta is 1.2 and expected market return of Nestle is 14%, while its risk-free rate is 9%. What would be the expected market return for stock of JKH if the Beta for JKH share is 0.8, average Treasury bill rate is 8% and return of market portfolio is 13%. Also, determine the nature (defensive, aggressive or neutral) of the share of XYZ, if its stock has a Beta value of 1.25, by explaining about the beta value if the stock is categorized as defensive.

Based on Capital Asset Pricing Model (CAPM), calculate the return on market portfolio if the Nestle stock beta is 1.2 and expected market return of Nestle is 14%, while its risk-free rate is 9%. What would be the expected market return for stock of JKH if the Beta for JKH share is 0.8, average Treasury bill rate is 8% and return of market portfolio is 13%. Also, determine the nature (defensive, aggressive or neutral) of the share of XYZ, if its stock has a Beta value of 1.25, by explaining about the beta value if the stock is categorized as defensive.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 3P

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