Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Here are data on two companies. The T-bill rate is 5.2% and the market risk premium is 6.5%. Company $1 Discount Store Everything $5 Forecast
| Here are data on two companies. The T-bill rate is 5.2% and the market risk premium is 6.5%. |
| Company | $1 Discount Store | Everything $5 |
| Forecast return | 13% | 12% |
| Standard deviation of returns | 14% | 16% |
| 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 | % | ||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Real Estate Finance
Authors: Wolfgang Breuer, Claudia Nadler
2012th Edition
3834934496, 978-3834934499
