1. According to Reuters Finance A2M Ltd has a Beta of 1.04. In terms of share...

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Finance

1. According to Reuters Finance A2M Ltd has a Beta of1.04. In terms of share investment, define what Beta represents.What does A2M’s Beta of 1.04 mean? How risky is it?

2. The average return on the market (MKT) in Australia for the past10 years has been 9.55% The yield on Australian 10 year treasurybonds is currently 2.29%. Using these as proxies for the Return onMarket (MKT) and Risk Free Rate (Rf), combine them with the A2MBeta (above) and calculate the return expected for A2M using theCapital Asset Pricing Model (CAPM).

3. Based on your CAPM findings construct a portfolio made up of 40%A2M and 60% MKT. Calculate the estimated return and ? for thisportfolio.

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4.3 Ratings (597 Votes)

1 Beta is a measure of systematic risk risk that cant be diversified of an investment It tells us how risky the stock is as compared to the index or market Beta of A2M Ltd of 104 indicates that if the market goes by 1 then the stock See Answer

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