2007-11-30 22:33:35 · 3 answers · asked by rocky9281 1 in Business & Finance ➔ Investing
There are many models for estimating the expected return on Stock. One such model is the Capital Asset Pricing Model (CAPM) -- which says that the expected return on a stock is equal to the risk free rate plus beta times the market premium.
The market premium is between 6.5% and 7.5% per year. Beta can be found by looking at Yahoo! Finance. The risk free rate can be found from Bloomberk or the Treasury department. Use the 3-month T-Bill rate (be careful to use the yield & not the discount rate).
2007-12-01 12:27:56 · answer #1 · answered by Ranto 7 · 0⤊ 0⤋
You choose the stock. Check how it has earned in past six months. Then you can calculate the pro rate return for next two months, if the prevailing trend continues. Example:
Month Rate
2 120
4 160
6 170
increase per month=(450-300)/6=25
Purchase price=100 then after 8 months=200
Yield = (200-170)x100x12/(170x2)=105% per annum
2007-12-04 00:05:42 · answer #2 · answered by SRINIVASAN R 5 · 0⤊ 0⤋
keep in mind there are no gaurantees in trading stocks whatsoever...if u want security go for high quality bonds
2007-12-02 00:13:43 · answer #3 · answered by In My Humble Opinion 2 · 0⤊ 0⤋