(Capital Asset Pricing Model) Johnson Manufacturing, Inc., is considering several investments. The rate on Treasury bills is currently 6 percent, and the expected return for the market is 15 percent. What should be the expected rate of return for each investment (using the CAPM)? Security A Beta 1.83 B C D 0.84 0.48 1.27 (Click on the icon in order to copy its contents into a spreadsheet.) a. The expected rate of return for security A, which has a beta of 1.83, is %. (Round to two decimal places.) b. The expected rate of return for security B, which has a beta of 0.84, is %. (Round to two decimal places.) c. The expected rate of return for security C, which has a beta of 0.48, is %. (Round to two decimal places.) d. The expected rate of return for security D, which has a beta of 1.27, is %. (Round to two decimal places.)
(Capital Asset Pricing Model) Johnson Manufacturing, Inc., is considering several investments. The rate on Treasury bills is currently 6 percent, and the expected return for the market is 15 percent. What should be the expected rate of return for each investment (using the CAPM)? Security A Beta 1.83 B C D 0.84 0.48 1.27 (Click on the icon in order to copy its contents into a spreadsheet.) a. The expected rate of return for security A, which has a beta of 1.83, is %. (Round to two decimal places.) b. The expected rate of return for security B, which has a beta of 0.84, is %. (Round to two decimal places.) c. The expected rate of return for security C, which has a beta of 0.48, is %. (Round to two decimal places.) d. The expected rate of return for security D, which has a beta of 1.27, is %. (Round to two decimal places.)
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
quiz 8-9
Transcribed Image Text:(Capital Asset Pricing Model) Johnson Manufacturing, Inc., is considering several investments. The rate on Treasury bills is currently 6 percent, and the expected return for the market is 15 percent. What should be the expected rate of return for each investment (using the CAPM)?
Security
A
Beta
1.83
B
C
D
0.84
0.48
1.27
(Click on the icon in order to copy its contents into a spreadsheet.)
a. The expected rate of return for security A, which has a beta of 1.83, is %. (Round to two decimal places.)
b. The expected rate of return for security B, which has a beta of 0.84, is %. (Round to two decimal places.)
c. The expected rate of return for security C, which has a beta of 0.48, is %. (Round to two decimal places.)
d. The expected rate of return for security D, which has a beta of 1.27, is %. (Round to two decimal places.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
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