Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer me fast 9. Shares in Liwa Chem (L) and Sur Plastic (S) lie on the security market line. Share (L) Share (s) Expected

image text in transcribed

please answer me fast

9. Shares in Liwa Chem (L) and Sur Plastic (S) lie on the security market line. Share (L) Share (s) Expected return 20% 25% Beta 1.3 1.8 (assume the CAPM holds) a. What is the riskless rate of return and the risk premium on the market index portfolio? (3 marks) b. Share of Al Ain Chemicals has an expected return of 19 per cent and a beta of 0.6. What is likely to happen to the price and return on shares in Al Ain Chemicals assuming the share has same riskless rate of return and risk premium as that of Land S. (2 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Day Trading Truths And Lies

Authors: Joe Zordi

1st Edition

1542885256, 978-1542885256

More Books

Students also viewed these Finance questions

Question

Use the basic tools of capital structure management.

Answered: 1 week ago