Assume the risk-free rate is 5.3% and the expected return on the market portfolio is 7.7%. Use the capital asset pricing model (CAPM) to find the required return for each of the securities in the able here, . The required return for investment A is %. (Round to one decimal place.) Data table - X (Click on the icon here in order to copy its contents of the data table below into a spreadsheet.)
Assume the risk-free rate is 5.3% and the expected return on the market portfolio is 7.7%. Use the capital asset pricing model (CAPM) to find the required return for each of the securities in the able here, . The required return for investment A is %. (Round to one decimal place.) Data table - X (Click on the icon here in order to copy its contents of the data table below into a spreadsheet.)
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
Related questions
Question
CH 5 Q8 Practice
Transcribed Image Text:Assume the risk-free rate is 5.3% and the expected return on the market portfolio is 7.7%. Use the capital asset pricing model (CAPM) to find the required return for each of the securities in the
table here,
The required return for investment A is %. (Round to one decimal place.)
Data table
(Click on the icon here in order to copy its contents of the data table below into
a spreadsheet.)
Security
ABCDE
Beta
1.35
0.83
0.19
0.98
0.67
X
Expert Solution
Step 1: Analysis
We need to use CAPM model to calculate required rate of return..
Required rate of return =Risk free rate+Beta(Market return-risk free rate)
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education