(CAPM and expected returns) a. Given the following holding-period returns. , compute the average returns and the standard deviations for the Zemin Corporation and for the market. b. If Zemin's beta is 0.83 and the risk-free rate is 9 percent, what would be an expected return for an investor owning Zemin? (Note: Because the preceding returns are based on monthly data, you will need to annualize the returns to make them comparable with the risk-free rate. For simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by 12.) c. How does Zemin's historical average return compare with the return you believe you should expect based on the capital asset pricing model and the firm's systematic risk? * F2 Data table Month 1 2 Market 5% 4 2 -3 3 6 4 (Click on the icon in order to copy its contents into a spreadsheet.) 80 13 3 4 Zemin Corp. 5% 5 5 888 74 2 -2 4 Print FS Done MacBook Air DA 2. - X 44 F7 ration is 3%. (Round to two decimal places) (Round to three decimal places) Zemin is%. (Round to two decimal places) based on the capital asset pricing model and the firm's systematic risk? (Select from nd the firm's systematic risk DII FS Dib 1 FIG GE FIV + Next F12
(CAPM and expected returns) a. Given the following holding-period returns. , compute the average returns and the standard deviations for the Zemin Corporation and for the market. b. If Zemin's beta is 0.83 and the risk-free rate is 9 percent, what would be an expected return for an investor owning Zemin? (Note: Because the preceding returns are based on monthly data, you will need to annualize the returns to make them comparable with the risk-free rate. For simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by 12.) c. How does Zemin's historical average return compare with the return you believe you should expect based on the capital asset pricing model and the firm's systematic risk? * F2 Data table Month 1 2 Market 5% 4 2 -3 3 6 4 (Click on the icon in order to copy its contents into a spreadsheet.) 80 13 3 4 Zemin Corp. 5% 5 5 888 74 2 -2 4 Print FS Done MacBook Air DA 2. - X 44 F7 ration is 3%. (Round to two decimal places) (Round to three decimal places) Zemin is%. (Round to two decimal places) based on the capital asset pricing model and the firm's systematic risk? (Select from nd the firm's systematic risk DII FS Dib 1 FIG GE FIV + Next F12
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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