Business, 15.11.2019 04:31 vanessa5325

Suppose the market portfolio is equally likely to increase by 40 % or decrease by 2 %. also suppose that the risk-free interest rate is 6 %. a. use the beta of a firm that goes up on average by 60 % when the market goes up and goes down by 5 % when the market goes down to estimate the expected return of its stock. how does this compare with the stock's actual expected return? b. use the beta of a firm that goes up on average by 24 % when the market goes down and goes down by 17 % when the market goes up to estimate the expected return of its stock. how does this compare with the stock's actual expected return?

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Suppose the market portfolio is equally likely to increase by 40 % or decrease by 2 %. also suppose...

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