The Treasury bill rate is 6%, and the expected return on the market portfolio is 12%. According che 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 1.7? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. If an investment with a beta of 0.6 offers an expected return of 8.2%, does it have a positive negative NPV? d. If the market expects a return of 11.7% 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
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The Treasury bill rate is 6%, and the expected return on the market portfolio is 12%. 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 1.7? (Do not round intermediate
calculations. Enter your answer as a percent rounded to 1 decimal place.)
c. If an investment with a beta of 0.6 offers an expected return of 8.2%, does it have a positive or
negative NPV?
d. If the market expects a return of 11.7% from stock X, what is its beta? (Do not round
intermediate calculations. Round your answer to 2 decimal places.)
Transcribed Image Text:The Treasury bill rate is 6%, and the expected return on the market portfolio is 12%. 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 1.7? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. If an investment with a beta of 0.6 offers an expected return of 8.2%, does it have a positive or negative NPV? d. If the market expects a return of 11.7% from stock X, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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