Question
16.(Capital asset pricing model) Anita, Inc. is considering the following investments. The current rate on Treasury bills is 6.5 percent, and the expected return for
16.(Capital asset pricing model)Anita, Inc. is considering the following investments. The current rate on Treasury bills is 6.5 percent, and the expected return for the market is 12.5 percent. Using the CAPM, what rates of return should Anita require for each individual security?
Stock | Beta |
H | 0.95 |
T | 1.52 |
P | 0.99 |
W | 1.21 |
Part 1
a.The expected rate of return for security H, which has a beta of 0.95, is _____%. (Round to two decimal places.)
Part 2
b.The expected rate of return for security T, which has a beta of 1.52, is _____% (Round to two decimal places.)
Part 3
c.The expected rate of return for security P, which has a beta of 0.99, is ____%.
(Round to two decimal places.)
Part 4
d. The expected rate of return for security W, which has a beta of 1.21, is _____%.
(Round to two decimal places.)
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