Question: Calculate the required return for Dell stock using the Ibbotson long-run return data. For the market risk premium value in the CAPM calculation of K

Calculate the required return for Dell stock using the Ibbotson long-run return data. For the market risk premium value in the CAPM calculation of K (return on the market minus the risk-free rate), use .06 (6.00%) that is the long-run average difference between the return on the S&P 500 and the average return on the long-term Treasury bond. For the risk-free rate in the equation, use the current (as of Thursday, 11/02/2023) yield on the 30-year Treasury bond. This yield was .0485 (4.85%). In the calculation of your k-value, compute the required return two ways:

(1) first, using Value Line’s beta value, and

(2) second, using the beta value given for your firm at the Yahoo finance website.

Discuss the implications of your results as it pertains to the importance of the calculation of beta.

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