3. Assume that the market is in equilibrium and that stock betas can be estimated with historical data. The returns on the market, the returns on United Fund (UF), the risk-free rate (7.00%), and the required return on the United Fund (15.00%) are shown below. Based on this information, what is the required return on the market, m? Year 2011 2012 2013 2014 2015 Market -9% 11% 15% 5% -1% UF -14% 16% 22% 7% -2%
3. Assume that the market is in equilibrium and that stock betas can be estimated with historical data. The returns on the market, the returns on United Fund (UF), the risk-free rate (7.00%), and the required return on the United Fund (15.00%) are shown below. Based on this information, what is the required return on the market, m? Year 2011 2012 2013 2014 2015 Market -9% 11% 15% 5% -1% UF -14% 16% 22% 7% -2%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![3. Assume that the market is in equilibrium and that stock betas can be estimated with
historical data. The returns on the market, the returns on United Fund (UF), the risk-free
rate (7.00%), and the required return on the United Fund (15.00%) are shown below.
Based on this information, what is the required return on the market, ?
Year
2011
2012
2013
2014
2015
Market
-9%
11%
15%
5%
-1%
UF
-14%
16%
22%
7%
-2%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5b0d6112-027f-4702-b596-f7951cf40db7%2F962115ad-f66b-49fe-8f53-ca14e59335e5%2Fk6bc17_processed.png&w=3840&q=75)
Transcribed Image Text:3. Assume that the market is in equilibrium and that stock betas can be estimated with
historical data. The returns on the market, the returns on United Fund (UF), the risk-free
rate (7.00%), and the required return on the United Fund (15.00%) are shown below.
Based on this information, what is the required return on the market, ?
Year
2011
2012
2013
2014
2015
Market
-9%
11%
15%
5%
-1%
UF
-14%
16%
22%
7%
-2%
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