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P/E Ratio is 75.40 and Beta is 1.62 Amazon is company 1. compare the P/E ratio of...

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Finance

P/E Ratio is 75.40 and Beta is 1.62 Amazon iscompany

1. compare the P/E ratio of your company with the industryaverage or with a major competitor. How does your chosen companycompare in their price compared to earnings? Is the stockovervalued, undervalued, or properly valued? Why? In accordancewith your findings, is it reasonable to buy the stock? Pleaseexplain your answers.

2. CALCULATE THE CAPM

Using the risk-free rate of 2%, and the 7.5% as market return,calculate the CAPM (Capital Asset Pricing Model) for your companystock. You can find the beta of the stock on the same quote page asyou found the P/E ratio above. What does this assigned beta tellyou about the stock? What is the required rate of return calculatedusing the CAPM model? Does this seem to be an attainable return andis the investment worth the risk?

P/E Ratio is 75.40 and Beta is 1.62 Amazon iscompany

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