Question
Q1. Here are data on two companies. The T-bill rate is 5.4% and the market risk premium is 6.8%. Company $1 Discount Store Everything $5
Q1.
| Here are data on two companies. The T-bill rate is 5.4% and the market risk premium is 6.8%. |
| Company | $1 Discount Store | Everything $5 |
| Forecast return | 13% | 12% |
| Standard deviation of returns | 15% | 17% |
| Beta | 1.6 | 1 |
| What would be the fair return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal places.) |
| Company | Expected Return | ||
| $1 Discount Store: | % | ||
| Everything $5 | % | ||
___________________________________________________________________
Q2.
| What must be the beta of a portfolio with E(rP) = 16.00%, if rf = 6% and E(rM) = 14%? (Round your answer to 2 decimal places.) |
| Beta of portfolio |
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Python For Finance
Authors: Yves Hilpisch
2nd Edition
1492024333, 978-1492024330
