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Consider the following data for two risk factors ( 1 and 2 ) and two securities ( J and L ) : lambda 0
Consider the following data for two risk factors and and two securities J and L:
lambda bJ
lambda bJ
lambda bL
bL
Compute the expected returns for both securities Round your answers to two decimal places.
Expected return for security J:
Expected return for security L:
Suppose that Security J is currently priced at $ while the price of Security L is $ Further, it is expected that both securities will pay a dividend of $ during the coming year. What is the expected price of each security one year from now? Do not round intermediate calculations. Round your answers to the nearest cent.
Expected price for security J: $
Expected price for security L: $
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