Explore BrainMass

Explore BrainMass

    Returns on portfolios/stock

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    I have found the following example; however, I am uncertain how to complete it. Thank you for your assistance.

    Suppose the expected return on the market portfolio is 13.8 percent and the risk-free rate is 6.4 percent. Solomon Inc. stock has a beta of 1.2. Assume the capital-asset-pricing model holds.

    a. What is the expected return on Solomon's stock?
    b. If the risk-free rate decreases to 3.5 percent, what is the expected return on Solomon's stock?

    © BrainMass Inc. brainmass.com March 4, 2021, 6:24 pm ad1c9bdddf
    https://brainmass.com/business/finance/returns-on-portfolios-stock-43313

    Solution Summary

    This explains the calculation of returns on portfolios/stock

    $2.49

    ADVERTISEMENT