Rank the following three stocks by thier risk-return relationship, best to worst. Night Ryder has an average return of 33 percent and standard deviation of 40 percent. The average return and standard deviation of WholeMart are 10 percent and 20 percent; and of Fruit Fly are 19 percent and 33 percent.
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From the Wall Street Journal, a website such as Yahoo! Finance, or some other source, obtain a current estimate of the risk-free rate (use a 10-year Treasury bond). Use the Value Line Investment Survey or Yahoo! Finance to obtain the beta for two (2) of the below five (5) stocks: Ford (autos) Dell (computers) Sempra Energy (utilities) Kroger (groceries) Bank of America (financial services) Use the information you gathered along with the market risk premium on large stocks given in the chapter to find the required return for each stock with the capital asset pricing model. Please discuss your findings.
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