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This week, we discussed the concept of the CAPM (capital asset pricing model) an
This week, we discussed the concept of the CAPM (capital asset pricing model) and beta. This week, I would like to take the opportunity to apply these concepts to real world companies.
– Select a U.S. public company (Make sure to include the company name in the title page)
– Calculate the cost of equity using the CAPM for the firm
– Evaluate the results – how realistic do you believe the result to be?
– Pull the beta from at least 2 sources – discuss why they may be different
In addition, please discuss is it possible to construct a portfolio of real-world stocks that has a required return equal to the risk-free rate? Explain? If a company’s beta were to double, would its required return also double?
Requirements:
1. Your assignment should be 3 – 4 pages in length and written in APA style format.
2. Separate title and reference page (minimum of 3 or 4 references)
3. Double spaced with 12 point Times Roman font and 1” by 1.5” margins.
4. Paraphrasing of content – Demonstrate that you understand the case by summarizing the case in your own words. Direct quotes should be used
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