Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 7.1%. Company $1 Discount Store Everything $5 Forecast return. 14% 13% Standard deviation of returns Beta 16% 18% Company $1 Discount Store Everything $5 Required: What would be the expected rate of return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal places.) Expected Return 1.6 % % 1.0
Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 7.1%. Company $1 Discount Store Everything $5 Forecast return. 14% 13% Standard deviation of returns Beta 16% 18% Company $1 Discount Store Everything $5 Required: What would be the expected rate of return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal places.) Expected Return 1.6 % % 1.0
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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![Here are data on two companies. The T - bill rate is 5.6%
and the market risk premium is 7.1%. Required: What
would be the expected rate of return for each company,
according to the capital asset pricing model (CAPM)? (
Round your answers to 2 decimal places.) \table[[Company,
Expected Return], [$1 Discount Store,, %](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F368ae735-2396-46e5-a51b-774c9fcebcd6%2F9493e03c-38f2-46be-b256-1620c40fc1a8%2F25f412b_processed.png&w=3840&q=75)
Transcribed Image Text:Here are data on two companies. The T - bill rate is 5.6%
and the market risk premium is 7.1%. Required: What
would be the expected rate of return for each company,
according to the capital asset pricing model (CAPM)? (
Round your answers to 2 decimal places.) \table[[Company,
Expected Return], [$1 Discount Store,, %
![Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 7.1%.
$1 Discount Store Everything $5
13%
18%
Company
Forecast return.
Standard deviation of returns
Beta
Company
$1 Discount Store
Everything $5
Expected Return
14%
16%
Required:
What would be the expected rate of return for each company, according to the capital asset pricing model (CAPM)? (Round your
answers to 2 decimal places.)
%
%
1.6
1.0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F368ae735-2396-46e5-a51b-774c9fcebcd6%2F9493e03c-38f2-46be-b256-1620c40fc1a8%2F9lq3gn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 7.1%.
$1 Discount Store Everything $5
13%
18%
Company
Forecast return.
Standard deviation of returns
Beta
Company
$1 Discount Store
Everything $5
Expected Return
14%
16%
Required:
What would be the expected rate of return for each company, according to the capital asset pricing model (CAPM)? (Round your
answers to 2 decimal places.)
%
%
1.6
1.0
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