Question
Capital Asset Pricing Model (CAPM) is one of the finance techniques that are used frequently to compute expected return from financial investments. Using the following
Capital Asset Pricing Model (CAPM) is one of the finance techniques that are used frequently to compute expected return from financial investments. Using the following information below, calculate Expected Return of Abdullah. Abdullah has an investment in RAK Ceramics Industries. Beta of this investment is 0.80. Return of Abu Dhabi Stock Exchange (ADX) is 25%. Return of the Abu Dhabi Government bonds 10%. a) What is the return of this investment? 2 marks b) In your own words, define beta of your investment. 1 marks c) What is the value of beta of the whole market? 1 marks d) Where can you find the value of beta of the whole market? 1 marks
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