For AT&T Inc. 2018. Apply the Capital Asset Pricing Model (CAPM) Security Market Line to estimate the required return on THE COMPANY stock. Expected Rate of Return = Risk-Free Rate + Beta(Market Return – Risk Free Rate) Use 7.5% for an average expected market rate of return Use 3% as an average risk-free rate (10 year composite rate of T-bill) Find the beta of your company’s stock with other financial data on Yahoo Finance or MarketWatch. Calculate the required return on the stock using the Capital Asset Pricing Model (CAPM) Security Market Line. Please show your work in a one line calculation as shown in the formula above.
AT&T Inc. Beta from Yahoo finance is=0.81
Expected Rate of Return of AT&T Inc. = Risk-Free Rate + Beta(Market Return – Risk Free Rate)
=3%+0.81*(7.5%-3%)
=6.65%
the above is answer..
For AT&T Inc. 2018. Apply the Capital Asset Pricing Model (CAPM) Security Market Line to estimate...
Question 2: Using the CAPM (capital asset pricing model) and SML (security market line), what is the expected rate of return for an investment with a Beta of 1.8, a risk free rate of return of 4%, and a market rate of return of 10%.
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