You Have Been Given an Opportunity to Invest in a Stock

question 21

Essay

You have been given an opportunity to invest in a stock. Recent trends suggest that a one percent rise in the stock market leads to approximately a two and one-half percent rise in the price of this stock. The real risk-free rate currently stands at 6% and stocks on average have provided 12% returns. Using the capital asset pricing model, determine the appropriate discount rate for the stock in question.

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Definitions:

SSDs

Solid State Drives, a type of data storage device that uses integrated circuit assemblies to store data persistently, typically using flash memory.

SSD

Solid State Drive, a type of storage device that uses integrated circuit assemblies to store data persistently, typically using flash memory, and functioning as secondary storage in the hierarchy of computer storage.

Storage Spaces

A Windows 8/10 technology that allows combining different types of storage devices into one writable space.