Question
Assume Rf = 4.2 percent and Rm = 8.2 percent and an increase in interest rates changes Rf to 7.02 percent; also assume that the
Assume Rf = 4.2 percent and Rm = 8.2 percent and an increase in interest rates changes Rf to 7.02 percent; also assume that the market premium (Rm Rf) changes to 6.7 percent. Compute Kj for the following betas: (Round the final answers to 2 decimal places. Omit $ sign in your response.) Please show all calculations
a. Kj when beta is 0.72 %
b. Kj when beta is 1.42 %
c. Kj when beta is 1.72 %
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Derivatives Markets
Authors: Rober L. Macdonald
4th edition
321543084, 978-0321543080
