Suppose you observe the following situation:SecurityPete Corp.Expected Return.190Beta1.80Repete Co.1.49.163a. Assume these securities are correctly priced. Based on the CAPM, what is theexpected return on the market? (Do not round intermediate calculations and enteryour answer as a percent rounded to 2 decimal places, e.g., 32.16.)b. What is the risk-free rate? (Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g., 32.16.)a. Expected return on marketb.Risk-free rate A stock has an expected return of 12.2 percent, the risk-free rate is 6 percent, and themarket risk premium is 10 percent. What must the beta of this stock be? (Do not roundintermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Beta of stock

Capital asset pricing model depicts the relationship between the expected return and systematic risk…

Answered: Suppose you observe the following…

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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Please answer both QUESTION 7 According to the capital asset pricing model (CAPM), fairly priced securities should have A. A non-zero alpha. в.A fair return based on the level of systematic risk. C. A fair return based on the level of unsystematic risk. D.A beta of 1. QUESTION 8 Diversification can increase fair return. True False
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Sp
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What does WRF = -0.50 mean? Group of answer choices The investor can borrow money at the risk-free rate. The investor can lend money at the current market rate. The investor can borrow money at the current market rate. The investor can borrow money at the prime rate of interest. The investor can lend money at the prime rate of interest.

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