1. The CAPM model was introduced by Jack Treynor (1961, 1962) William Sharpe (1964), John Lintner(1965) and Jan Mossin (1966) independently. CAPM formula is:

   Ks = Krf + (Km- Krf) B

   Where, Ks= Cost of Issuing a Security = Investors Required Return = 15%

   Krf = Risk Free Rate of Return as measured by Avg Return of T-Bills = ?

   Km = Avg Market Return measured by S&P-500 or some other as Proxy for the whole Market = 12.5%

   B = Beta Coefficient of the Issuer of the Security = 1.25

   Estimated Risk Free Rate of Return (Krf) is:

   	a.	2.25%
   	b.	2.50%
   	c.	4.17%
   	d.	10.8%
   	e.	0.96%
   	f.	1.75%