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Betas and Expected Stock Returns. Use the capital asset pricing model to estimate the


expected return for each of these stocks. You will need a figure for the current Treasury bill rate.


You can find this also on by clicking on Bonds?Rates. Assume for your


estimates a market risk premium of 7%.


Try comparing the stock betas of


Google (GOOG), @ 691.02


The Home Depot (HD), @132.73



BETA 0.990855



Du Pont (DD), @66.41



BETA 1.85099



Altria Group (MO), and @ 62.19



BETA 0.686051



Caterpillar (CAT). @ 77.75





BETA 1.032



BETA 1.238.34



2. Fund Betas. Log on to and look at the list of mutual funds that are managed


by Fidelity. Some of these funds, such as the Aggressive Growth Fund, appear from their names


to be high-risk. Others, such as the Balanced Fund, appear to be low-risk. Pick several apparent


high- and low-risk funds and then check whether their betas really do match the fund?s name.




Paper#9209950 | Written in 27-Jul-2016

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