The following information relates to five stocks listed in five different sectors at the Nairobi Securities Exchange .The return on treasury bills is 8% and the average return in the market has been found to be 13%. Estimated Return(%) Beta Williamson tea 12 0.7 Equity Bank 8.2 1 Home Afrika 20 1.2 Bamburi Cement 1.4 Nation Media Group 10 -0.4

The following information relates to five stocks listed in five different sectors at the Nairobi Securities Exchange .The return on treasury bills is 8% and the average return in the market has been found to be 13%. Estimated Return(%) Beta Williamson tea 12 0.7 Equity Bank 8.2 1 Home Afrika 20 1.2 Bamburi Cement 1.4 Nation Media Group 10 -0.4

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 1P

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The following information relates to five stocks listed in five different sectors at the Nairobi Securities Exchange .The return on treasury bills is 4% and the average return in the market has been found to be 10% Estimated Return(%) Beta Sasini Ltd 8 0.7 Stanbic Holdings 6.2 1 Scan group Ltd 15 1.2 Crown Paints Kenya 10.5 1.4 Sanlam Kenya PLC 13 -0.4 Required: Using the capital asset pricing model (CAPM) determine the Required Rate of Return (RRR) for each stock and state whether it is undervalued, overvalued or fairly valued.
The following information relates to five stocks listed in five different sectors at A Securities Exchange .The return on treasury bills is 8% and the average return in the market has been found to be 13%. Estimated Return(%) Beta Williamson tea 12 0.7 Equity Bank 8.2 1 Home Afrika 20 1.2 Bamburi Cement 5 1.4 Nation Media Group 10 -0.4 Using the capital asset pricing model (CAPM) determine the Required Rate of Return (RRR) for each stock and state whether it is undervalued or overvalued
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