Homework Answers
For Kitty
Er = 5% + 1 * (11% - 5%)
Er = 11%
For Parry
Er = 5% + 1.5 * (11% - 5%)
Er = 14%
Since actual return of Kity is only 11% while in market it is trading at 12%, it is over priced
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Given the following information, if CAPM holds which security is overpriced and which is underpriced? Securities...
Question 8 Suppose the CAPM holds, given the following information: market portfolio's expected return = 896...
Question 8 Suppose the CAPM holds, given the following information: market portfolio's expected return = 896 risk-free rate = 496 Canyon Buff's beta = 1.5 then expected return for Canyon Buffs stock is closest to? Selected Answer: B. 16.096
Security X has a rate of return of 13% and a beta of 1.15. The risk-free...
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CAPM Question
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Given the following information, use the CAPM to calculate the beta of the stock. The required...
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Question 8 Suppose the CAPM holds, given the following information: market portfolio's expected return = 896 risk-free rate = 496 Canyon Buff's beta = 1.5 then expected return for Canyon Buffs stock is closest to? Selected Answer: B. 16.096
Security X has a rate of return of 13% and a beta of 1.15. The risk-free rate is 5% and the market expected rate of return is 10%. According to the capital asset pricing model, security X is 1) fairly priced 2) underpriced 3) overpriced 4) None of the answers are correct Security X has a rate of return of 13% and a beta of 1.15. The risk-free rate is 5% and the market expected rate of return is 10%....
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