Consider the following data concerning the Poussin company: States Probabilits Market returns Profitability of the title 1
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Question:
Consider the following data concerning the Poussin company:
States | Probabilits | Market returns | Profitability of the title |
1 | 0,1 | -0,18 | -0,32 |
2 | 0,3 | 0,07 | 0,00 |
3 | 0,4 | 0,16 | 0,22 |
4 | 0,2 | 0,21 | 0,40 |
The risk-free rate is 7%.
- Calculate the anticipated profitability of the market and that of Poussin's stock, the variance of market returns, the covariance of Poussin's returns with those of the market and the beta of the stock.
- Write the CAPM equation.
- What is the desired profitability of the Poussin title? Compare with its expected (anticipated) profitability.
Related Book For
Business Forecasting with Forecast X
ISBN: 978-0073373645
6th edition
Authors: Holton wilson, barry keating, john solutions inc
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