Suppose the market risk premium is 6% and the risk-free interest rate is 6%. Using the data in the table, calculate the expected return of investing in a. Starbucks' stock. b. Hershey's stock. c. Autodesk's stock. Why don't all investors hold Autodesk's stock rather than Hershey's stock

Suppose the market risk premium is 6% and the risk-free interest rate is 6%. Using the data in the table, calculate the expected return of investing in a. Starbucks' stock. b. Hershey's stock. c. Autodesk's stock. Why don't all investors hold Autodesk's stock rather than Hershey's stock

Quickbooks Online Accounting

3rd Edition

ISBN:9780357391693

Author:Owen

Publisher:Owen

Chapter7: Payroll

Section: Chapter Questions

Problem 1.13C

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Concept explainers

Stock Market Indices

Stock indexes are used to compare the price fluctuations of a group of stocks of similar companies, which are combined based on a similar industry or a particular market capitalization limit or type of market. The price comparison is based on a pre-determined standard method or indicators. These stock indexes are usually considered a base for comparison of a particular stock, and the performance of that particular company can be easily determined.

Question

Suppose the market risk premium is 6% and the risk-free interest rate is 6%. Using the data in the table, calculate the expected return of investing in

a. Starbucks' stock.

b. Hershey's stock.

c. Autodesk's stock.

Why don't all investors hold Autodesk's stock rather than Hershey's stock

Data table
(Click on the following icon g in order to copy its contents into a spreadsheet.)
Starbucks
Hershey
Autodesk
Beta
0.80
0.33
1.72

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