Question
The Treasury bill rate is 6%, and the expected return on the market portfolio is 14%. According to the capital asset pricing model: a. What
The Treasury bill rate is 6%, and the expected return on the market portfolio is 14%. According to the capital asset pricing model:
a.What is the risk premium on the market?
b.What is the required return on an investment with a beta of 1.4?(Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
c.If an investment with a beta of 0.6 offers an expected return of 8.4%, does it have a positive or negative NPV?
d.If the market expects a return of 11.6% from stock X, what is its beta?(Do not round intermediate calculations. Round your answer to 2 decimal places.)
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