Homework Answers
a.
Beta = 0.06/0.08
Beta = 0.75
b.
Using CAMP model,
Expected Return Rate = 0.05 + 0.75(0.09 - 0.05)
Expected Return Rate = 8.00%
c.
Expected Return= 0.75(0.09) + 0.25(0.08)
Expected Return= 8.75%
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Question 3. Capital asset pricing model. (2 points) The expected return on the market portfolio is...
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