The Expected Return of Snap, Inc. Stock Calculation

What is the expected return of Snap, Inc. stock according to the CAPM model?

1. 1.20

2. The expected return varies based on certain factors

The expected return of SNAP is, The expected return of SNAP is dependent on the risk-free rate, market return, and the beta value, as per the Capital Asset Pricing Model (CAPM).

According to the Capital Asset Pricing Model (CAPM), the expected return of a stock (SNAP in this case) is calculated using the formula: Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate).

The given information states that the beta of SNAP is 1.20. To calculate the expected return of SNAP, we need the risk-free rate (typically the yield on government bonds) and the market return (usually represented by a market index like the S&P 500). These rates are not provided in the given context, so we cannot determine the specific expected return of SNAP without this additional information.

The expected return will vary depending on the risk-free rate, market return, and the beta value provided.

It is important to consider these factors when estimating the expected return of a stock in order to make informed investment decisions based on the risk-return trade-off.