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Problem - CAPM Assume that the risk-free rate is 7%, and the expected return on the market portfolio is 12%. Using the CAPM model, answer
Problem - CAPM Assume that the risk-free rate is 7%, and the expected return on the market portfolio is 12%. Using the CAPM model, answer the following questions. a. Find the risk premium on the market. b. Calculate the required return on investment assuming that the investment has a beta of 1.6. (Intermediate calculations should not be rounded. Type your response as a percentage, rounded to 1 decimal place.) c. Assume that an investment has 8.0% expected return and the beta of the investment is 0.6. Then what is the sign of its net present value (NPV)? d. Calculate the beta of Akbank stock if the market expects it to return 10.6% percent? (Intermediate computations should not be rounded. Your answer should be rounded to two decimal places.) a. % b. Market risk premium Return on investment NPV % c. d. Beta
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