Question

In: Finance

Consider a share of stock that cost $50 one year ago but is worth $55 today...

Consider a share of stock that cost $50 one year ago but is worth $55 today (assume no dividends were paid out)?

1. What was the total (annual) return?

2. If the Rfis 4% and Rmis 12%, what is this stock’s beta (assume the beta has stayed the same since last year and the stock is in equilibrium)?

3. Using the same information, now assume the stock costs $52 today.  If it is in equilibrium, what must its beta be under this situation?

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 14 hours ago
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