General Accounting Your estimate of the market risk premium is5%. The risk-free rate of return is 5%, andGeneral Motors has a beta of 1.3. Accordingto the Capital Asset Pricing Model (CAPM),what is its expected return?A) 8.6%B) 9.8%C) 10.9%D) 11.5%

To calculate the expected return using the Capital Asset Pricing Model (CAPM), the formula…

Answered: Your estimate of the market risk…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Your estimate of the market risk premium is 5%. The risk-free rate of return is 3%, and General Motors has a beta of 1.7. According to the Capital Asset Pricing Model (CAPM), what is its expected return? A. 11.5% B. 10.4% C. 12.1% D. 10.9%
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(Capital Asset Pricing Model) CSB, Inc. has a beta of 0.758. If the expected market return is 10.5 percent and the risk-free rate is 6.5 percent, what is the appropriate expected return of CSB (using the CAPM)? The appropriate expected return of CSB is%. (Round to two decimal places.)
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Your estimate of the market risk premium is 5%. The risk-free rate of return is 5%, and General Motors has a beta of 1.3. According to the Capital Asset Pricing Model (CAPM), what is its expected return? A) 8.6% B) 9.8% C) 10.9% D) 11.5%