Given the following excess return index model regression results Ra* -0.059616 +0.957478Rm* where; \sigma M = 0.80226720, the return on the market portfolio is 0.085306, and the risk-free rate is 0.018302. Note Ra* and Rm* are excess returns. Calculate the actual return for Stock A. Round to 4 decimals, and present answer as a decimal (.08, not 8%) Answer: 0.0228 8:55 pm

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
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Given the following excess return index model regression
results
Ra* -0.059616 +0.957478Rm*
where;
\sigma M = 0.80226720, the return on the market portfolio
is 0.085306, and the risk-free rate is 0.018302. Note
Ra* and Rm* are excess returns.
Calculate the actual return for Stock A. Round to
4 decimals, and present answer as a decimal (.08, not 8%)
Answer:
0.0228
8:55 pm
Transcribed Image Text:Given the following excess return index model regression results Ra* -0.059616 +0.957478Rm* where; \sigma M = 0.80226720, the return on the market portfolio is 0.085306, and the risk-free rate is 0.018302. Note Ra* and Rm* are excess returns. Calculate the actual return for Stock A. Round to 4 decimals, and present answer as a decimal (.08, not 8%) Answer: 0.0228 8:55 pm
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