Question
(Capital Asset Pricing Model)Johnson Manufacturing, Inc., is considering several investments. The rate on Treasury bills is currently 6 percent, and the expected return for the
(Capital Asset Pricing Model)Johnson Manufacturing, Inc., is considering several investments. The rate on Treasury bills is currently
6
percent, and the expected return for the market is
10
percent. What should be the expected rate of return for each investment (using the CAPM)?
| Security | Beta |
|---|---|
| A | 1.66 |
| B | 1.02 |
| C | 0.66 |
| D | 1.35 |
Expected return on A, B, C and D.
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Financial Markets And Institutions
Authors: Jeff Madura
5th Edition
0324027443, 9780324027440
