4. Using CAPM determine the required rate of return on the following: Rf-3.10% Rm-10.12% B-1.21 R...

Question

Question

4. Using CAPM determine the required rate of return on the following: Rf-3.10% Rm-10.12% B-1.21 Rf-5.95% Rm-12.37% B 0.78 Rf

Answer 1

Answer #1

YTM of the bonds using an online calculator are:
Bond 1	13.57%
Bond 2	5.26%
Bond 3	18.66%
CHOICE:
Bond 3 which, has the highest YTM.

Answer 2

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