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Here are data on two companies. The T-bill rate is 5.0% and the market risk premium is 6.2%. Company $1 Discount Store Everything $5 Forecast
| Here are data on two companies. The T-bill rate is 5.0% and the market risk premium is 6.2%. |
| Company | $1 Discount Store | Everything $5 |
| Forecast return | 13% | 12% |
| Standard deviation of returns | 13% | 15% |
| 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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Key Financial Market Concepts
Authors: Bob Steiner
2nd Edition
0273750127, 978-0273750123
