You are considering the purchase of superior oil, Finance Basics

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You are considering the purchase of superior oil

Question: You are considering the purchase of Superior Oil International, Ltd. (stock symbol SOIL) common stock. You consult Yahoo Finance and find that the stock has a ß (beta) of 2.0. Further research indicates that the current risk free rate of return is 4.0% and the expected return on the entire stock market is 14%. Use the Capital Asset Pricing Model to find the following:

What is the expected rate of return on SOIL's stock?

What is the Market Risk Premium?

Is this investment more or less risky than the overall market?

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Finance Basics: You are considering the purchase of superior oil

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