5. Imagine there are two risky assets and the risk-free asset of the US bond in the table below. Suppose all the assumptions of the Capital Asset Pricing Model (CAPM) are satisfied. Then answer the following questions. Rate of returns Shares Relative Shares Standard Security Outstanding In market Price Deviation Jazz Inc. 10,000 1/6 $4.50 12% 6% Classical, Inc. 20,000 1/3 $6.75 8% 2% US bonds 30,000 1/2 $2.40 6% (8] Total 60,000 [D2]: Explain the assumptions of the CAPM in three lines. [M14]: Answer the capitalization weight of Juzz Inc. in the market. a. 1/6 b. 1/4 c. 1/3 d. 2/5 е. 3/5 |M15): Answer the expected rate of return of the above market portfolio. 8% b. 9% c. 10% d. 11% е. 12%
5. Imagine there are two risky assets and the risk-free asset of the US bond in the table below. Suppose all the assumptions of the Capital Asset Pricing Model (CAPM) are satisfied. Then answer the following questions. Rate of returns Shares Relative Shares Standard Security Outstanding In market Price Deviation Jazz Inc. 10,000 1/6 $4.50 12% 6% Classical, Inc. 20,000 1/3 $6.75 8% 2% US bonds 30,000 1/2 $2.40 6% (8] Total 60,000 [D2]: Explain the assumptions of the CAPM in three lines. [M14]: Answer the capitalization weight of Juzz Inc. in the market. a. 1/6 b. 1/4 c. 1/3 d. 2/5 е. 3/5 |M15): Answer the expected rate of return of the above market portfolio. 8% b. 9% c. 10% d. 11% е. 12%
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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Question
Please solve M14 and M15
![5. Imagine there are two risky assets and the risk-free asset of the US bond in the table below.
Suppose all the assumptions of the Capital Asset Pricing Model (CAPM) are satisfied. Then
answer the following questions.
Security
Shares
Relative Shares
Rate of
Standard
Outstanding
In market
Price
Deviation
returns
Jazz Inc.
10,000
1/6
$4.50
12%
6%
Classical, Inc.
20,000
1/3
$6.75
8%
2%
US bonds
30,000
1/2
$2.40
6%
[8]
Total
60,000
1
[D2]: Explain the assumptions of the CAPM in three lines.
[M14]: Answer the capitalization weight of Juzz Inc. in the market.
b. 1/4
c. 1/3
a.
1/6
d. 2/5
е. 3/5
[M15]: Answer the expected rate of return of the above market portfolio.
8%
b. 9%
c. 10%
d. I1%
е. 12%
а.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1077e2db-e230-4539-af72-4ff36b7e393b%2Fbe331623-0cd3-472e-9da8-94131d2c5bf5%2Fb4912pg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5. Imagine there are two risky assets and the risk-free asset of the US bond in the table below.
Suppose all the assumptions of the Capital Asset Pricing Model (CAPM) are satisfied. Then
answer the following questions.
Security
Shares
Relative Shares
Rate of
Standard
Outstanding
In market
Price
Deviation
returns
Jazz Inc.
10,000
1/6
$4.50
12%
6%
Classical, Inc.
20,000
1/3
$6.75
8%
2%
US bonds
30,000
1/2
$2.40
6%
[8]
Total
60,000
1
[D2]: Explain the assumptions of the CAPM in three lines.
[M14]: Answer the capitalization weight of Juzz Inc. in the market.
b. 1/4
c. 1/3
a.
1/6
d. 2/5
е. 3/5
[M15]: Answer the expected rate of return of the above market portfolio.
8%
b. 9%
c. 10%
d. I1%
е. 12%
а.
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