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Solve the equation for 1) Rf and 2) rm E(ri) = Rf + Bi(E(rm) - Rf) E(ri) = return required on financia Rf = risk-free
Solve the equation for 1) Rf and 2) rm E(ri) = Rf + Bi(E(rm) - Rf) E(ri) = return required on financia Rf = risk-free rate of return Bi = beta value for financial asset E(rm) = average return on the cap
Solve the equation for
1) Rf
and
2) rm
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