If the expected rate of return on the market portfolio is 13% and T-bills yield 6%, what
Question:
If the expected rate of return on the market portfolio is 13% and T-bills yield 6%, what must be the beta of a stock that investors expect to return 10%?
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Fundamentals Of Corporate Finance
ISBN: 9781264101566
11th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Alan J. Marcus
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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