ABOUT CAPM Suppose that U(ct) = 1/2 ct . Also, Cov( ct+1 ct , rt+1) is estimated at 0.16, and the payoff Pt+1 is either 1200 or 1000 with probability 0.5. The risk-free rate is 2%. Compute the asset price Pt .

(based on capital asset pricing model)

11. Suppose that U(a) = va. Also, Cou(Act+2, rt+1) is estimated at 0.16, and the payoff Pt+1 is either 1200 or 1000 with probability 0.5. The risk-free rate is 2%. Compute the asset price Pt. 11. Suppose that U(a) = va. Also, Cou(Act+2, rt+1) is estimated at 0.16, and the payoff Pt+1 is either 1200 or 1000 with probability 0.5. The risk-free rate is 2%. Compute the asset price Pt