The Treasury bill rate is 3%, and the expected return on the market portfolio is 14%. According to the capital asset pricing model: a. What is the risk premium on the market? b. What is the required return on an investment with a beta of 1.8? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. If an investment with a beta of 0.8 offers an expected return of 8.2%, does it have a positive or negative NPV? d. If the market expects a return of 12.9% from stock X, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
The Treasury bill rate is 3%, and the expected return on the market portfolio is 14%. According to the capital asset pricing model: a. What is the risk premium on the market? b. What is the required return on an investment with a beta of 1.8? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. If an investment with a beta of 0.8 offers an expected return of 8.2%, does it have a positive or negative NPV? d. If the market expects a return of 12.9% from stock X, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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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The Treasury bill rate is 3%, and the expected return on the market portfolio is 14%. According to the
a. What is the risk premium on the market?
b. What is the required
c. If an investment with a beta of 0.8 offers an expected return of 8.2%, does it have a positive or negative
d. If the market expects a return of 12.9% from stock X, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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