Question
GRE Inc is a well-established IT company in the US. In the recent past the variance of its annual share return has been 25(%)
GRE Inc is a well-established IT company in the US. In the recent past the variance of its annual share return has been 25(%) while the S&P500 composite index has had an average annual return of 5% and a variance of return of 36(%). The returns on GRE Inc have a coefficient of correlation of 0.7 with the market index. Required: Compute the B for GRE's equity. (b) What is the relationship between GRE's return and the market as implied by B? (c) Given the T-bill with a return at 1%, calculate the expected returns on GRE's equity.
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
7th Edition
013213683X, 978-0132136839
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