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

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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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
Transcribed Image Text: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
Transcribed Image Text: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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