distribution for stocksity Youthe following p 2012 State Probability Return on Stock A Return on Stock B 1 0.10 10% 8% 2 0.20 13% 7% 3 0.20 12% 6% 0.30 14% 9% 5 0.20 15% 8% The expected rates of return of stocks A and Bare LAKL and MALAKL respectively. A 14%; 10% MALA B 13.2%; 9% C 7.7%; 13.2% MAR D 13.2%; 7.7% 2345 4 MALA MA
distribution for stocksity Youthe following p 2012 State Probability Return on Stock A Return on Stock B 1 0.10 10% 8% 2 0.20 13% 7% 3 0.20 12% 6% 0.30 14% 9% 5 0.20 15% 8% The expected rates of return of stocks A and Bare LAKL and MALAKL respectively. A 14%; 10% MALA B 13.2%; 9% C 7.7%; 13.2% MAR D 13.2%; 7.7% 2345 4 MALA MA
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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Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Question
Transcribed Image Text:distributiothe following progability
for stocks A and
DE
20201
State
Probability Return on Stock A Return on Stock B
1
0.10
10%
8%
0.20
13%
7%
0.20
12%
6%
0.30
14%
9%
5
0.20
15%
8%
Ghi
The expected rates of
AKL
return of stocks A and
B are
respectively.
A 14%; 10%
MALA
B 13.2%; 9%
C 7.7%; 13.2%
MA
D 13.2%; 7.7%
12345
2
3
4
and MALAKLA
MALA
MA
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