“Financial Management (MGT201)” “Discussion Question” Given a risk-free rate of 8...
...percent and a market risk? “Financial Management (MGT201)”
“Discussion Question”
Given a risk-free rate of 8 percent and a market risk premium of 9.5 percent, based on the betas given in the following table:
SecurityBeta
A0.95
B1.25
1. Calculate required rate of return of each stock?
2. If Ahmed is a risk lover investor, he will prefer to invest in which stock?
3. As against it, Shahzad is a risk averse investor; he will prefer to invest in which stock?
Required rate of return of stock A=??
Required rate of return of stock B=??
Ahmad should invest in=??
Shahzad should invest in=??
...percent and a market risk? “Financial Management (MGT201)”
“Discussion Question”
Given a risk-free rate of 8 percent and a market risk premium of 9.5 percent, based on the betas given in the following table:
SecurityBeta
A0.95
B1.25
1. Calculate required rate of return of each stock?
2. If Ahmed is a risk lover investor, he will prefer to invest in which stock?
3. As against it, Shahzad is a risk averse investor; he will prefer to invest in which stock?
Required rate of return of stock A=??
Required rate of return of stock B=??
Ahmad should invest in=??
Shahzad should invest in=??