Here are data on two companies. The T-bill rate is 4% and the market risk premium is

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Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%.

Company $1 Discount Store Everything $5 Forecasted return 12% 11%
Standard deviation of returns 8% 10%
Beta 1.5 1.0 What would be the fair return for each company according to the capital asset pricing model (CAPM)?

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Investments

ISBN: 9781259277177

11th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Question Posted: Jul 24, 2024 05:04 AM

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Here are data on two companies. The T-bill rate is 4% and the market risk premium is

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Investments

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