Question
Here are data on two companies. The T-bill rate is 5.0% and the market risk premium is 9.5%. 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 9.5%.
| Company | $1 Discount Store | Everything $5 |
| Forecast return | 16% | 15% |
| Standard deviation of returns | 24% | 26% |
| Beta | 1.4 | 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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Financial Management In The Public Sector Tools Applications And Cases
Authors: Xiaohu Wang
2nd Edition
0765625229, 9780765625229
