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POINTS THIS PAGE Question 2 of 3- The Curious Investor The expected return of the S&P 500 (a broad portfolio of stocks r
Posted: Thu May 05, 2022 8:47 am
by answerhappygod
- Points This Page Question 2 Of 3 The Curious Investor The Expected Return Of The S P 500 A Broad Portfolio Of Stocks R 1 (57.43 KiB) Viewed 32 times
POINTS THIS PAGE Question 2 of 3- The Curious Investor The expected return of the S&P 500 (a broad portfolio of stocks representing the stock market) is 10% p.a. The expected return of the 10 year US Treasury (representing the risk free asset) is 3% p.a. You are curious about the stock of TSLA. From your Finance class, you know that TSLA is correctly priced using the expected return obtained using the CAPM. a. [10 points] What should be the expected return of TSLA if its beta is 1.97? b. [10 points] If the earnings per share of TSLA is $3.04 with an annual growth rate in earnings of 16%, what is the fair (should be) price of TSLA using the dividend discount model for stocks (Assume dividends earnings).