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Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. Company $1 Discount Store Everything $5 Forecasted
Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%.
Company $1 Discount Store Everything $5
Forecasted return 12% 11%
Standard deviation of returns 8% 10%
Beta 1.5 1.0
What would be the fair return for each company, according to the capital asset pricing model (CAPM)? (Do not round intermediate calculations. Omit the "%" sign in your response.) Company Expected Return
$1 Discount Store .................................. %
Everything $5 ......................... %
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