Financial Management
Note: Before you participate in this discussion, view the Unit 4 CAPM Lecture to learn how to compute the expected return of a company.
Instructions
Martin and Samantha need your help again to determine the best course of action for their company. Read the following scenario, complete the tasks below, and discuss the questions.
Martin and Samantha have been given the responsibility of investing a percentage of their company’s money. They need your assistance in selecting an appropriate investment. Apply the Capital Asset Pricing Model (CAPM) and Beta Models to select a stock that best matches their risk tolerance profiles.
Remember, Martin is a conservative investor, and Samantha has an above-average tolerance for risk.
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.
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.
