4.1 Discussion Beta as a Measure of Risk In this research assignment, you will calculate the required rate of return for your firm with the Capital Asset Pricing Model, or CAPM, equation. This...

Make sure to put name of company you use.


4.1 Discussion Beta as a Measure of Risk  In this research assignment, you will calculate the required rate of return for your firm with the Capital Asset Pricing Model, or CAPM, equation.  This provides an understanding of how to determine the annual return expected by the stockholders to keep their money invested in the firm. Discussion Topic Martin and Samantha need your help again to determine the best course of action for their company. Please read the following scenario, complete the tasks below, and discuss the questions. Tasks Complete the following tasks: 1. Review the lecture on the CAPM. 2. Select a publicly traded company. 3. Go to www.finance.yahoo.com (Links to an external site.). Enter the company’s stock symbol in the “Get Quotes” box. If you do not know the stock symbol, you can enter the company’s name in the search tool. 4. Search for the company’s Beta coefficient on the Statistics page.  It will be listed under the Trading Information area of this page.  Make a note of this number.   5. Look beneath the Beta and find the 52-week change for the stock. Write these numbers down. 6. Use 1.2% for the Risk-free rate. 7. Use 10.9% for the Market rate.  This is the 50-year average return for the S&P 500. 8. Using the information above (the stock’s Beta, the risk-free rate, and the average return for the S&P 500) compute the required rate of return for your stock. In other words, plug these numbers into the CAPM model.   In your original post,  You are required to make only one recommendation either to Martin or to Samantha. · Compare the required rate of return that you just computed with the actual 52-week change for the security. What do you notice? · In your opinion, is this stock a good investment for Martin or Samantha? Why or why not? Please explain your answer.