Month Zemin Corp. Market

1 8% 5%

2 4% 1%

3 0% 0%

4 -1% -3%

5 6% 3%

6 1% 3%

Given the followingholding-period returns,

, compute the average returns and the standard deviations for the Zemin Corporation and for the market.

b.IfZemin's beta is 1.84 and therisk-free rate is 6 percent, what would be an expected return for an investor owningZemin? (Note: Because the preceding returns are based on monthlydata, you will need to annualize the returns to make them comparable with therisk-free rate. Forsimplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by12.)

c.How doesZemin's historical average return compare with the return you believe you should expect based on the capital asset pricing model and thefirm's systematicrisk?

a.Given theholding-period returns shown in thetable, the average monthly return for the Zemin Corporation is

nothing

%. (Round to two decimalplaces.)