Question
If the current risk premium in the market is 5% and the risk-free rate is 1.5% , Use CAPM model to respond to the questions
If the current risk premium in the market is 5% and the risk-free rate is 1.5% , Use CAPM model to respond to the questions below. CAPM model: Ri=Rf+Beta*(Rmarket- Rf) A)What is the market's required rate of return. B)If a firm has a beta of .8, what would be a rational investor's required rate of return? C) What does beta mean if it equals to one?
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Risk Sensitive Investment Management
Authors: Mark H A Davis, Sébastien Lleo
1st Edition
9814578037, 978-9814578035
