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 answ er the following questions. Shares Relative Shares Rate of Standard Security Outstanding In market Price Deviation returns 12% Jazz Inc. 10,000 1/6 $4.50 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.
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 answ er the following questions. Shares Relative Shares Rate of Standard Security Outstanding In market Price Deviation returns 12% Jazz Inc. 10,000 1/6 $4.50 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.
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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![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.
Shares
Outstanding
Relative Shares
Rate of
Standard
Security
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1077e2db-e230-4539-af72-4ff36b7e393b%2Ff3ceb20d-7433-4fe3-96f5-a3a53f9e76bd%2Fliwojc6_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.
Shares
Outstanding
Relative Shares
Rate of
Standard
Security
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.
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