You are considering Project A, with the following information (Assume all statistics given are correct): Economy Probability of Rates of Return ____ Condition State Occurring Project A Market T-Bill Bad 0.2 3.0% 0.0% 4.82% Average 0.4 10.0% 8.0% 4.82% Good 0.4 15.0% 12.0% 4.82% Expected return 10.6% 8.0% 4.82% Standard deviation 5.72% 4.38% 0% Correlation Coefficient between Project A and Market = 0.83 Compute (a) Project A's beta; and (b) the required rate of return for Project A. Round your answers to two decimal places of a whole number for beta and of % for RRR but ignore % in your answer, e.g., x.xx. (Hint: Measure Project A's beta using the statistical formula first and then RRR using the CAPM.) Project A's beta = ; Required rate of return for Project A = %
You are considering Project A, with the following information (Assume all statistics given are correct):
Economy Probability of
Condition State Occurring Project A Market T-Bill
Bad 0.2 3.0% 0.0% 4.82%
Average 0.4 10.0% 8.0% 4.82%
Good 0.4 15.0% 12.0% 4.82%
Expected return 10.6% 8.0% 4.82%
Standard deviation 5.72% 4.38% 0%
Correlation Coefficient between Project A and Market = 0.83
Compute (a) Project A's beta; and (b) the required rate of return for Project A. Round your answers to two decimal places of a whole number for beta and of % for RRR but ignore % in your answer, e.g., x.xx. (Hint: Measure Project A's beta using the statistical formula first and then RRR using the CAPM.)
Project A's beta = ;
Required rate of return for Project A = %
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