Question
1. The Treasury bill rate (i.e. risk-free rate) is 1.5%, and the expected return on the market portfolio is 15%. Using the capital asset pricing
1. The Treasury bill rate (i.e. risk-free rate) is 1.5%, and the expected return on the market portfolio is 15%. Using the capital asset pricing model:
a. What is the risk premium on the market?
b. What is the required rate of return on an investment with a beta of 0.75?
c. If an investment with a beta of 1.25 offers an expected return of 16%, does it have a positive NPV? Explain.
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Create Wealth Over The Long Run Give Yourself The Life You Deserve
Authors: Micheal J. Bess
1st Edition
979-8865993711
