Question
4. 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
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4. 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 |
| Forecast return | 12% | 11% |
| Standard deviations of returns | 8% | 10% |
| Beta | 1.5 | 1.0 |
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What would be the expected rate of returns for each company, according to the capital asset pricing model (CAPM)?
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5. Characterize each company if the previous problem was underpriced, overpriced, or properly priced.
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Truth About Buying Annuities Annuities Can Make Or Break Your Retirement
Authors: Steve Weisman
1st Edition
0132353083,0132701162
