Capital Assets Pricing Model (CAPM) (20 points) 4. You have landed an interview with Gold & Silver Bank, and they are asking you to calculate the expected return on a series of assets they are evaluating. They provide the data below and have sent you a few additional questions. Risk-free rate 5.26% Stock Expected Return Betas ALMM 45.32% 9.2 AIR 34.10% 5.1 BLUE 61.20% 3.7 87.20% 4.5 MON Given the expected return on an asset, E(Ri), is equal to the risk-free rate, Rf, plus the risk premium. - E(R)=R₂+ [E(RM) – Rƒ] × Bi What is each stock's expected return, E(Ri)? Provide the result as x.xx%.

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
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Capital Assets Pricing Model (CAPM)
(20 points)
4. You have landed an interview with Gold & Silver Bank, and they are asking you to calculate the
expected return on a series of assets they are evaluating. They provide the data below and have sent
you a few additional questions.
Risk-free rate
5.26%
Stock
Expected Return
Betas
ALMM
45.32%
9.2
AIR
34.10%
5.1
BLUE
61.20%
3.7
87.20%
4.5
MON
Given the expected return on an asset, E(Ri), is equal to the risk-free rate, Rf, plus the risk premium.
-
E(R)=R₂+ [E(RM) – Rƒ] × Bi
What is each stock's expected return, E(Ri)? Provide the result as x.xx%.
Transcribed Image Text:Capital Assets Pricing Model (CAPM) (20 points) 4. You have landed an interview with Gold & Silver Bank, and they are asking you to calculate the expected return on a series of assets they are evaluating. They provide the data below and have sent you a few additional questions. Risk-free rate 5.26% Stock Expected Return Betas ALMM 45.32% 9.2 AIR 34.10% 5.1 BLUE 61.20% 3.7 87.20% 4.5 MON Given the expected return on an asset, E(Ri), is equal to the risk-free rate, Rf, plus the risk premium. - E(R)=R₂+ [E(RM) – Rƒ] × Bi What is each stock's expected return, E(Ri)? Provide the result as x.xx%.
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