FIN301 module 3 SLP fin 301 module 3 SLP (Use as a guide)

Feb 3rd, 2012
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Assignment: Part I Using Yahoo! Finance find the value of beta for WasteManagement.Write a two page paper discussing the following items: a. What is the estimated beta coefficient of WasteManagement? What does this beta mean in terms of your choice to include this company in your overall portfolio? b. Given the beta of WasteManagement, the present yield to maturity on U.S. government bonds maturing in one year (currently about 4.5% annually) and an assessment that the market risk premium (that is - the difference between the expected rate of return on the 'market portfolio' and the risk-free rate of interest) is 6.5%, use the CAPM equation in order to find out what is the present 'cost of equity' of your company? Explain what is the meaning of 'cost of equity'. c. Choose two other companies, look up their "Beta" and report the names of these companies and their betas. Suppose you invest one third of your money in each of the stocks of these companies. What will the beta of the portfolio

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