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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)? |
| Company | Expected Return | ||
| $1 Discount Store | % | ||
| Everything $5 | % | ||
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The Handbook Of Structured Finance
Authors: Arnaud De Servigny, Norbert Jobst
1st Edition
0071468641, 978-0071468640
