Managerial Finance (MBA 5323)

Capital Asset Pricing Model (CAPM)

Homework #14, 10 points due 11:59 p.m., Thursday 10/19/23

2. For each case in the following table, use the capital asset pricing model (CAPM) to find the expected return E(R_i).

Risk free Market

Case rate R_f return E(R_M) beta

A 4% 8% 1.30

B 2 7 0.90

C 5 13 -0.58

D 10 12 1.00

E 4 12 0.60