Question
(Capital Asset Pricing Model) Johnson Manufacturing, Inc., is considering several investments. The rate on Treasury bills is currently 5.5 percent, and the expected return for
(Capital Asset Pricing Model)Johnson Manufacturing, Inc., is considering several investments. The rate on Treasury bills is currently
5.5
percent, and the expected return for the market is
13.5
percent. What should be the expected rate of return for each investment (using the CAPM)?
Security | Beta |
---|---|
A | 1.56 |
B | 1.07 |
C | 0.49 |
D | 1.16 |
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Part 1
a.The expected rate of return for security A, which has a beta of
1.56,
is
enter your response here%.
(Round to two decimal places.)
Part 2
b.The expected rate of return for security B, which has a beta of
1.07,
is
enter your response here%.
(Round to two decimal places.)
Part 3
c.The expected rate of return for security C, which has a beta of
0.49,
is
enter your response here%.
(Round to two decimal places.)
Part 4
d.The expected rate of return for security D, which has a beta of
1.16,
is
enter your response here%.
(Round to two decimal places.)
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