Question a stock has a beta of 12 and the standard, Ask an Expert

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Question: A stock has a beta of 1.2 and the standard deviation of its returns is 25%. The market risk premium is 5% and the risk-free rate is 4%.

a. What is the expected return for the stock?

b. What are the expected return and standard deviation for a portfolio that is equally invested in the stock and the risk-free asset?

c. A financial analyst forecasts a return of 12% for the stock. Would you buy it? Why or why not?

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Category:- Basic Finance
Reference No.:- M92259688

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