Question
Help. I tried solving the two problems below but I wasn't able to arrive at the correct answer. Can you please show me an explanation
Problem 7.26
Brian knows that the beta of his portfolio is equal to 1, but he does not know the risk-free rate of return or the market risk premium. He also knows that the expected return on the market is 10.25 percent. What is the expected return on Brian's portfolio? (Round answer to 2 decimal places, e.g. 12.25)
Sample Test Problem 7.01
Given the following information from Cullumber Corporation, what price would the CAPM predict that the company's stock will trade for one year from today? (Do not round intermediate calculations. Round final answer to 2 decimal places, e.g. 50.75.)
Risk free rate:3.6% Market risk premium:8.6% Beta:0.65Current stock price:$64.60 Annual dividend:$1.84
Price:
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