As you are a security analyst preparing a report for the firm’s expectation regarding two stocks for the year to come. Your report is to include the expected returns for these stocks and a graph illustrating the expected risk-return trade-off. You have been informed that the firm expects the S&P 500 to earn a return of 11% in the year ahead and that the risk-free rate is 5%. According to Morningstar, the betas for stocks X and Y are 0.5 and 1.5 respectively. Required 1- Find the expected returns for X and Y using CAPM Moodle.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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As you are a security analyst preparing a report for the firm’s expectation regarding two stocks for the year to come. Your report is to include the expected returns for these stocks and a graph illustrating the expected risk-return trade-off. You have been informed that the firm expects the S&P 500 to earn a return of 11% in the year ahead and that the risk-free rate is 5%. According to Morningstar, the betas for stocks X and Y are 0.5 and 1.5 respectively. Required 1- Find the expected returns for X and Y using CAPM Moodle.

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