You have just prepared a graph similar to Exhibit 7.9, comparing historical data for Pear Computer Corp.

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You have just prepared a graph similar to Exhibit 7.9, comparing historical data for Pear Computer Corp. and the general market. When you plot the line of best fit for these data, you find that the slope of that line is 2.5. If you know that the market generated a return of 12 percent and that the risk-free rate is 5 percent, then what would your best estimate be for the return of Pear Computer during that same time period?

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Fundamentals of corporate finance

ISBN: 978-0470876442

2nd Edition

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

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