Question
Build a spreadsheet that will calculate each input for the CAPM given the other 3 inputs. Use the following scenarios to test your models. Use
Build a spreadsheet that will calculate each input for the CAPM given the other 3 inputs. Use the following scenarios to test your models.
Use the CAPM to calculate the required return given the risk-free rate, beta and the return on the market index. Test your model given a risk-free rate of 2%, a return on the market index of 10% and a beta of 1.3.
Use the CAPM to calculate the required return given the risk-free rate, beta and the market risk premium. Test your model given a risk-free rate of 2%, a market risk premium of 8% and a beta of 1.3.
Use the CAPM to calculate beta given the required return, the risk-free rate, and the return on the market index. Test your model given a risk-free rate of 3.1%, a return on the market index of 10.3% a required return of 11.38%.
Use the CAPM to calculate the risk-free rate given the required return, beta, and the return on the market index. Test your model given a beta of 1.2, a return on the market index of 10.5% a required return of 12.1%.
Use the CAPM to calculate the market risk premium given the required return, the risk-free rate, and beta. Test your model given a risk-free rate of 3.5%, a beta of 1.2, and a required return of 14%.
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