Short Answer
Use the following information to answer the question below.
You hold a diversified portfolio of stocks and are considering investing in the XYZ Company. The firm's prospects look good and you estimate the following probability distribution of possible returns:
The return on the market is 13.5% and the risk free rate is 7%. You have calculated XYZ's beta from past returns as 1.3 and you believe this will be the future beta.
-Based on your calculations in the three questions above, should you buy this stock? Why or why not?
Correct Answer:
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Don't buy: the expected return...View Answer
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Correct Answer:
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