as input. The risk-free rate, Rf, is to be taken as 3.3% and the market risk premium, (E (RM) − Rf ), as 6.3%.

(Answer: CAPM beta values and expected returns for companies 1–4 are (i) 0.9232, 0.8185, 1.6337,

−1.0527 (ii) 9.12%, 8.46%, 13.59%, −3.33%.)