Question
Manipulating CAPM: Use the basic equation for the capital asset pricing model (CAPM) to work each of the following problems. a. Find the required return
Manipulating CAPM: Use the basic equation for the capital asset pricing model (CAPM) to work each of the following problems.
a. Find the required return for an asset with a beta of 1.01 when the risk-free rate and market return are 5% and 7%, respectively. (Round to two decimal places)
b. Find the risk-free rate for a firm with a required return of 13.213% and a beta of 1.43 when the market return is 12%. (Round to two decimal places)
c. Find the market return for an asset with a required return of 15.901% and a beta of 1.94 when the risk-free rate is 3%.
d. Find the beta for an asset with a required return of 16.888% when the risk-free rate and market return are 10% and 14.2%, respectively.
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