Question
Use the basic equation for the capital asset pricing model(CAPM) to work each of the following problems. a. Find the required return for an asset
Use the basic equation for the capital asset pricing model(CAPM) to work each of the following problems.
a. Find the required return for an asset with a beta of 1.51 when the risk-free rate and market return are 8% and 10% respectively.
b. Find the risk-free rate for a firm with a required return of 9.791% and a beta of 0.97 when the market return is 10%.
c. Find the market return for an asset with a required return of 14.010% and a beta of 1.01 when the risk-free rate is 9 %.
d. Find the beta for an asset with a required return of 19.993% when the risk-free rate and market return are 7% and 14.1 %, respectively.
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