Using the information below (the stock's Beta, and the average 52-week return for the S&P 500) compute the required rate of return for your stock. In other words, plug these numbers into the CAPM model. Use 1.20% for the risk free rate. Questions Discuss the following questions in your initial post. You are required to make only one recommendation either to Martin or to Samantha.

Beta (5Y Monthly) 0.58

52-Week Change 5.01%

S&P500 52-Week Change -2.29%

 

Theformula for the CAPM is expressed as:

( RM - RRF) R STOCK = RRF +

Compare the required rate of return that you just computed with the actual 52-week change for the security.

What do you notice? In your opinion, is this stock a good investment for Martin or Samantha? Why or why not? Please explain your answer.