Market Risk Pvemium = 7.Treasury Bill hate - 1.93%3DGOOG - Alphabet Beta= 1.07HO-Home Oepot- Beta 1.02PG - Protector and Gamble= Beta- 0.45MO- Altria Group - Beta- 0.65CA-Catevpillar Inc. -Beta- 0.90 You can find estimates of stock betas by logging on to finance.yahoo.com and looking at a company'sStatistics. Try comparing the stock betas of Alphabet (GOOG), The Home Depot (HD), Procter & Gamble(PG), Altria Group (MO), and Caterpillar (CAT). Ônce you have read Section 12.3, use the capital asset pricingmodel to estimate the expected return for each of these stocks. You will need a figure for the current Treasurybill rate. You can find this also on finance.yahoo.com by clicking on Bonds-Rates. Assume for your estimatesa market risk premium of 7%.RE(R) = RRR = rf + risk premium = r + Bi[E(Rm) – r|]%3D%3D%3D

Calculate the expected return of GOOG (E(R) GOOG) by using the CAPM model. The treasury bill rate (R…

Answered: Market hisk Pvemium= 7/. Treasury B:ll…

Market hisk Pvemium= 7/. Treasury B:ll hate - 1.93 %3D GOOG - Alphabet - Beta= 1.07 HO - Home Depot- Beta> 1.02 PG - Protector and Gamble = Beta- 0.45 MO- Altria Group -Beta-O.65

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter16: Capital Structure Decisions

Section: Chapter Questions

Problem 3P: Premium for Financial Risk Ethier Enterprise has an unlevered beta of 1.0. Ethier is Financed with...

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Question

100%

Market Risk Pvemium = 7.
Treasury Bill hate - 1.93
%3D
GOOG - Alphabet Beta= 1.07
HO-Home Oepot- Beta 1.02
PG - Protector and Gamble= Beta- 0.45
MO- Altria Group - Beta- 0.65
CA-Catevpillar Inc. -Beta- 0.90

You can find estimates of stock betas by logging on to finance.yahoo.com and looking at a company's
Statistics. Try comparing the stock betas of Alphabet (GOOG), The Home Depot (HD), Procter & Gamble
(PG), Altria Group (MO), and Caterpillar (CAT). Ônce you have read Section 12.3, use the capital asset pricing
model to estimate the expected return for each of these stocks. You will need a figure for the current Treasury
bill rate. You can find this also on finance.yahoo.com by clicking on Bonds-Rates. Assume for your estimates
a market risk premium of 7%.
R
E(R) = RRR = rf + risk premium = r + Bi[E(Rm) – r|]
%3D
%3D
%3D

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