Alex just received $2,000 as a Christmas gift from her Grandparents and she is considering investing the gift in shares of CDN Inc.

Alex has gathered the following information about CDN Inc.? Current share price: $126  Expected price at the end of the year: $138 ? Return on the market portfolio: 10% o Estimated beta: 1.75? Expected dividend at the end of the year: $6.75? Return on Government of Canada T-Bills: 3% Should Alex purchase shares in CDN Inc.? Show your work and Explain? 

Answer rating: 100% (QA)

Answer i Yes Alex should purchase shares in CDN Inc To determine if this would be a good investment we can use the Capital Asset Pricing Model CAPM The CAPM formula is as follows Expected return on th... View the full answer