Question
Here are data on two companies. The T-bill rate is 4.8% and the market risk premium is 5.9%. Company $1 Discount Store Everything $5 Forecast
Here are data on two companies. The T-bill rate is 4.8% and the market risk premium is 5.9%.
| Company | $1 Discount Store | Everything $5 |
| Forecast return | 12% | 11% |
| Standard deviation of returns | 12% | 14% |
| Beta | 1.6 | 1 |
|
| ||
What would be the fair return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal places.)
| Company | Expected Return | ||
| $1 Discount Store | % | ||
| Everything $5 | % | ||
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The Sterling Bonds And Fixed Income Handbook
Authors: Mark Glowrey
1st Edition
0857190423, 978-0857190420
