Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on May 18, 2024

Suppose the return on an asset as suggested by CAPM is 8%. However, you notice that similar assets actively trading in public markets have an

Suppose the return on an asset as suggested by CAPM is 8%. However, you notice that similar assets actively trading in public markets have an annualized return of 11%. Comment on this discrepancy between CAPM and the present realized returns

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Mergers Acquisition And Other Restructuring Activities

Authors: Donald M. Depamphilis

6th Edition

123854857, 978-0123854858

More Books

Students also viewed these Finance questions

Question

★★★★★

The Fall 1995 issue of Investment Digest, a publication of The Variable Annuity Life Insurance Company of Houston, Texas, discusses the importance of portfolio diversification for long-term...

Answered: 1 week ago

Question

★★★★★

Consider the following information: Rate of Return if State Occurs State of Economy Boom :57 Bust of Economy .66 .34 Probability of State Stock A .09 .13 Stock B Stock C .03 .19 .24 -.04 a. What is...

Answered: 1 week ago

Question

★★★★★

Assume that you recently graduated and landed a job as a financial planner with Cicero Services, an investment advisory company. Your first client recently inherited some assets and has asked you to...

Answered: 1 week ago

Question

★★★★★

Use Gordon formula to calculate the price of the stock. ITC company expected to pay dividend of $4 and growth rate of 3% per year is constant forever. Required return is 8%.

Answered: 1 week ago

Question

★★★★★

Mad Rock Inc. is a company that sells mp3 music online. It is expected to generate earnings of $1 per share this year after its Web site is upgraded and online marketing is stepped up. Given the...

Answered: 1 week ago

Question

★★★★★

Internal rate of return: Refer to Problem 10.4. What is the IRR that Franklin Mints management can expect on this project?

Answered: 1 week ago

Question

★★★★★

=+2. Which of the following are Actions and which are States of Nature?

Answered: 1 week ago

Question

★★★★★

The cost of materials transferred into the Filling Department of Savannah Lotion Company is $ 13,300, including $ 5,000 from the Blending Department and $ 8,300 from the materials storeroom. The...

Answered: 1 week ago

Question

★★★★★

A project requires an initial investment in equipment of $90,000 and then requires an initial investment in working capital of $10,000 (at t = 0). You expect the project to produce sales revenue of...

Answered: 1 week ago

Question

★★★★★

A compound was obtained from a natural product and had the molecular formula C14H20O3. It contained three methoxy (OCH3) groups and a CH2CHoeC (CH3)2 substituent. Oxidation with either chromic acid...

Answered: 1 week ago

Question

★★★★★

The limit of the function as x goes to 1 is The limit of the function as x goes to 3 is (x2+ 3 for x 2 1 is in the domain of the function (type true or false) The left side limit at 1 exists (type...

Answered: 1 week ago

Question

★★★★★

HR managers develop strategies to systematically monitor the major factors influencing their organization to identify trends that might affect the formulation and implementation of both...

Answered: 1 week ago

Question

★★★★★

Assess each strategy based on cost, beneficial long-term effects, & moral outcomes. Thoroughly, apply a minimum of four ethical theories to assess options. Ensure evaluation is in-depth, insightful,...

Answered: 1 week ago

Question

★★★★★

Refer to Step 5.1. Calculate the weights of VBTLX and VFIAX that achieve a portfolio allocation that represents an "optimal risky portfolio" on the efficient frontier, as of the end of December 2015....

Answered: 1 week ago

Question

★★★★★

Pun Poon Phya is the managing director of PPP Food Products, a recently established manufacturing company based in Kuala Lumpur. He recently approached your firm, ACT Partners, Chartered Accountants,...

Answered: 1 week ago

Question

★★★★★

When Martin, a BCBA, meets with his supervisee, he will typically explain a concept, and model how to perform the related skill. However, Martin finds role plays awkward, so he is considering...

Answered: 1 week ago

Question

★★★★★

structions Chart of Accounts Journal TAccounts Final Question uctions Following selected transactions were completed during August of the current year: Transactions Aug. 1 4 Billed customers for fees...

Answered: 1 week ago

Question

★★★★★

Outline some of the major problems confronting an international advertiser.

Answered: 1 week ago

Question

★★★★★

Find the approximate p-value for the test in Example 15.8.

Answered: 1 week ago

Question

★★★★★

15.41 Toxic Chemicals An experiment was EX1541 conducted to compare the effects of three toxic chemicals, A, B, and C, on the skin of rats. One- centimetre squares of skin were treated with the...

Answered: 1 week ago

Question

★★★★★

15.40 Supermarket Prices In a comparison of the prices of items at five supermarkets, six items were randomly selected and the price of each was recorded for each of the five supermarkets. The...

Answered: 1 week ago

Previous Question Next Question