The following table shows estimates of the risks of two Australian stocks: a. What is...
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The following table shows estimates of the risks of two Australian stocks: a. What is the measure of the total risk? [1 mark] b. What proportion of each stock's risk is diversifiable risk? [2 marks] c. If the CAPM is correct, what is the expected return of Qantas? Assume a risk-free interest rate of 5% and expected market return of 12%. [1 mark] d. The betas are estimated based on stock returns. Are they asset beta or equity beta? [1 mark]
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