Question 17 GRE Inc is a well-established IT company in the US. In the recent past the variance of its annual share retu
Posted: Mon Mar 21, 2022 4:36 pm
- Question 17 Gre Inc Is A Well Established It Company In The Us In The Recent Past The Variance Of Its Annual Share Retu 1 (72.8 KiB) Viewed 39 times
Question 17 GRE Inc is a well-established IT company in the US. In the recent past the variance of its annual share return has been 25(%)2 while the S&P500 composite index has had an average annual return of 5% and a variance of return of 36(%)? The returns on GRE Inc have a coefficient of correlation of 0.7 with the market index. Required: (a) Compute the B for GRE's equity. (5 marks) (b) What is the relationship between GRE's return and the market as implied by B? (5 marks) (c) Given the T-bill with a return at 1%, calculate the expected returns on GRE's equity. (5 marks) (Total 15 marks)