Given the following​ holding-period returns, LOADING... ​, compute the average returns and the standard deviations for the Zemin Corporation and for the market. b.  If​ Zemin's beta is 1.87 and the​ risk-free rate is 6 ​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?

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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a.  Given the following​ holding-period returns,
LOADING...
​,
compute the average returns and the standard deviations for the Zemin Corporation and for the market.
b.  If​ Zemin's beta is
1.87
and the​ risk-free rate is
6
​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?
 
Month
Zemin Corp.
Market
1
5
​%
6
​%
2
2
 
   1
 
3
2
 
   0
 
4
−4
 
−1
 
5
4
 
   3
 
6
3
 
   4
 
 
 
 
 
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