Remember the following the 1-factor model or CAPM is defined as re-rf = beta* [rm -rf] what is the return on equity (re) if rf = 1.30 rm = 1.17 beta = 1.12
Remember the following the 1-factor model or CAPM is defined as re-rf = beta* [rm -rf] what is the return on equity (re) if rf = 1.30 rm = 1.17 beta = 1.12
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
Related questions
Question
![The text from the image is as follows:
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**Remember the following: the 1-factor model or CAPM is defined as re - rf = beta * [rm - rf]**
What is the return on equity (re) if:
- rf = 1.30
- rm = 1.17
- beta = 1.12
---
There are no graphs or diagrams in the image. The text is explaining the Capital Asset Pricing Model (CAPM) formula, which calculates the expected return on equity (re) based on the risk-free rate (rf), the expected market return (rm), and the asset's beta.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd47d2725-9ed4-4a07-8ea4-b309d33139a1%2F1d70197a-8c94-4352-afb4-aaa8faaac582%2Fi26c6u_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The text from the image is as follows:
---
**Remember the following: the 1-factor model or CAPM is defined as re - rf = beta * [rm - rf]**
What is the return on equity (re) if:
- rf = 1.30
- rm = 1.17
- beta = 1.12
---
There are no graphs or diagrams in the image. The text is explaining the Capital Asset Pricing Model (CAPM) formula, which calculates the expected return on equity (re) based on the risk-free rate (rf), the expected market return (rm), and the asset's beta.
Expert Solution
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Step 1
Formula :
re = rf + beta* (rm - rf)
re = expected return on equity
Step by step
Solved in 2 steps
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