Question
Suppose that the risk-free rate is 3.50% per annum. In addition, assume that the market portfolio has a required return of 12.50% per annum and
Suppose that the risk-free rate is 3.50% per annum. In addition, assume that the market portfolio has a required return of 12.50% per annum and a standard deviation of 15.10%.
You are attempting to value the shares of Firm QQ. According to the Capital Asset Pricing Model (CAPM), what rate of return per annum should you require as compensation for investing in shares of Firm QQ if
A) ...those shares have a beta of 0.00? % (Round to two decimal places)
B) ...those shares have a beta of 0.67? % (Round to two decimal places)
C) ...those shares have a beta of 1.00? % (Round to two decimal places)
D) ...those shares have a beta of 1.57? % (Round to two decimal places)
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