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Please show all steps for the standard deviation for rate! (CAPM and expected returns) a. Given the following holding-period returns, : , compute the average
Please show all steps for the standard deviation for rate!
(CAPM and expected returns) a. Given the following holding-period returns, : , compute the average returns and the standard deviations for the Zemin Corporation and for the market. b. If Zemin's beta is 1.27 and the risk-free rate is 7 percent, what would be an expected return for an investor owning Zemin? (Note: Because the preceding returns are based on monthly data, you will need to annualize comparable with the risk-free rate. For simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by 12.) c. How does Zemin's historical average return compare with the return you believe you should expect based on the capital asset pricing model and the firm's systematic risk? returns to make them a. Given the holding-period returns shown in the table, the average monthly return for the Zemin Corporation is %. (Round to two decimal places.) The standard deviation for the Zemin Corporation is %. (Round to two decimal places.) Given the holding-period returns shown in the table, the average monthly return for the market is %. (Round to three decimal places.) The standard deviation for the market is %. (Round to two decimal places.) b. If Zemin's beta is 1.27 and the risk-free rate is 7 percent, the expected return for an investor owning Zemin is%. (Round to two decimal places.) The average annual historical return for Zemin is %. (Round to two decimal places.) c. How does Zemin's historical average return compare with the return you believe you should expect based on the capital asset pricing model and the firm's systematic risk? (Select from the drop-down menu.) Zemin's historical average return is the return based on the capital asset pricing model and the firm's systematic risk. Data table Month 1 Zemin Corp 7% 5 2 3 0 -2 Market 3% 1 2 -3 3 3 4 5 6 4 2Step by Step Solution
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