Question: You are planning to create a portfolio from Lockheed Martin Corp. and Intel Corp., but first need to determine the required (expected) return for each
You are planning to create a portfolio from Lockheed Martin Corp. and Intel Corp., but first need to determine the required (expected) return for each stock. After completing a bit of research you determine that the 10 Year U.S. Treasury yield is 3% and the expected return on the S&P 500 is 13%. You calculated the betas and found a beta for Lockheed of .7 and 1.2 for Intel. Calculate the required/expected returns for Lockheed and Intel using the SML.
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