Which of the following companies have the lowest systematic​ risk?   A. A​ mid-range clothing store company​ (Abercrombie &​ Fitch), beta=1.25.   B. A motorcycle manufacturer​ (Harley-Davidson), beta=2.00.   C. A coffee company​ (Starbucks), beta=1.20.   D. A company that sells soups​ (Campbell’s), beta=0.60

Your team was asked to compute for the cost of equity for prospect companies using CAPM method and the manager provided you the following information: Cisco Co. Salesforce Co. 3% Risk free rate Beta Market return Cost of equity 1.25 12% 14.50% 119 15% SAP SE Co. 4% 1.3 11.80% What is the market return for SAP SE Co? Answer: Adobe Co. 5% 1.4 8%

5. Last year, Rocket Inc. earned a 19% return. Farmer's Corp. earned 11%. The overall market return last year was 16%, and the risk-free rate was 2%. If Rocket stock has a beta of 1.8 and Farmer's has a beta of 0.5, which stock performed better once you take risk into account? Review Only Click the icon to see the Worked Solution. Rocket's expected return is %. (Enter as a percentage and round to one decimal place.) Farmer's expected return is %. (Enter as a percentage and round to one decimal place.) Which stock performed better once you take risk into account? (Select the best answer below.) A. Given its beta, Rocket should have earned a much higher return than it did (11% vs 19%). Farmer's, on the other hand, earned a higher return than we would have expected (27.2% vs 9.0%). So taking risk into account, Rocket was the better stock. B. Given its beta, Rocket should have earned a much higher return than it did (27.2% vs 19%). Farmer's, on the other hand, earned a higher return than…

1. Below are the hypothetical average percentage returns for the two companies- Microsoft and Verizon MSFT: 4,2,4,6,2,6,4,7,4,1,4,2,6   Verizon: 5,3,3,7,1,8,2,9,1,6,6,3,8   Market: 4,6,3,7,2,9,4,7,1,3,2,8,2 1). Find the geometric average returns for each.