f) The Treasury bill rate at the end of May 2013 was 4%. Given the betas for Wal-Mart and Target and using the above data for the S&P Index as a measure for the market portfolio expected return, estimate an appropriate required rate of return, using the CAPM model and given the level of systematic risk for each stock. You need to convert the monthly average S&P500 return into annual terms simply by multiplying by 12. What do you conclude?

The data below presents monthly closing prices of Standard & Poor's 500 Index, Wal-Mart, and Target to calculate the holding-period returns for the 24 months from May 2011 through May 2013 Month S&P500 Walmart Target 2011 1.631 2012 May June July August September October November December January February March April May June July August September October November December January February March April May 1.606 1.684 1.633 1.682 1.757 1.806 1.848 1.783 1.859 1.872 1.884 1.924 1.960 1.931 2.003 1.972 2.018 2.068 2.059 1.995 2.105 2.068 2.086 2.182 74,84 74,49 77,94 72,98 73,96 76,75 81,01 78,69 74,68 74,70 76,43 79,71 76,77 75,07 73,58 75,50 76,47 76,27 87,54 85,88 84,98 83,93 82,25 78,05 75,86 69,50 68,86 71,25 63,31 63,98 64,79 63,93 63,27 56,64 62,54 60,51 61,75 56,76 57,95 59,59 60,07 62,68 61,82 74,00 75,91 73,61 76,83 82,07 78,83 79,29 2013 The data below presents monthly closing prices of Standard & Poor's 500 Index, Wal-Mart, and Target to calculate the holding-period returns for the 24 months from May 2011 through May 2013 Month S&P500 Walmart Target 2011 1.631 2012 May June July August September October November December January February March April May June July August September October November December January February March April May 1.606 1.684 1.633 1.682 1.757 1.806 1.848 1.783 1.859 1.872 1.884 1.924 1.960 1.931 2.003 1.972 2.018 2.068 2.059 1.995 2.105 2.068 2.086 2.182 74,84 74,49 77,94 72,98 73,96 76,75 81,01 78,69 74,68 74,70 76,43 79,71 76,77 75,07 73,58 75,50 76,47 76,27 87,54 85,88 84,98 83,93 82,25 78,05 75,86 69,50 68,86 71,25 63,31 63,98 64,79 63,93 63,27 56,64 62,54 60,51 61,75 56,76 57,95 59,59 60,07 62,68 61,82 74,00 75,91 73,61 76,83 82,07 78,83 79,29 2013