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You have some information on two companies: Company BVH TX inc. Forecast return 12 % 11 % Standard deviation of returns 12 % 14 %
You have some information on two companies:
| Company | BVH | TX inc. | ||
| Forecast return | 12 | % | 11 | % |
| Standard deviation of returns | 12 | % | 14 | % |
| Beta | 1.6 |
| 1.0 |
|
You also know that the T-bill rate is 4.80% and the market risk premium is 5.90%.
What would the return for BVH be; using the capital asset pricing model (CAPM)?
Type solution as a percentage (e.g. .01 write as 1) Do not add units.
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