Homework 3

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2. Snacks Inc. has a mean expected return of 15%, with a standard deviation of 8%. The CFO is going to the bank to discuss a large loan. The banker asks what range of returns, with a 95% confidence level, will contain Snacks true expected returns next year. a. (-1%, 31%) b. (7%, 23%) C. (7%, 15%) d. Cannot calculate due to the lack of information 3, Vaughn Corporation common stock has a required return of 17.5% and a beta of 1.75 If the expected risk-free return is 3%, what is the expected return for the market based on the CAPM? a. b. c. d. 11.29% 15.27% 14.29% 13.35%