Question
Here are data on two companies. The T-bill rate is 4.4% and the market risk premium is 8.6%. Company $1 Discount Store Everything $5 Forecast
Here are data on two companies. The T-bill rate is 4.4% and the market risk premium is 8.6%.
| Company | $1 Discount Store | Everything $5 | ||
| Forecast return | 15 | % | 14 | % |
| Standard deviation of returns | 21 | % | 23 | % |
| Beta | 1.4 | 1.0 | ||
What would be the fair return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal places.)
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
Healthcare Finance An Introduction To Accounting And Financial Management
Authors: Louis C. Gapenski
4th Edition
1567932800, 978-1567932805
