Ask Me Help Desk

Ask Me Help Desk (https://www.askmehelpdesk.com/forum.php)
-   Finance & Accounting (https://www.askmehelpdesk.com/forumdisplay.php?f=411)
-   -   Capm example need help (https://www.askmehelpdesk.com/showthread.php?t=551646)

  • Feb 5, 2011, 04:07 PM
    hello_19
    capm example need help
    Ok so I was given this table

    Security Beta Expected Return
    X 1.50 20%
    Y 0.60 16%

    Part A was to find Risk Free Rate and I found that out by (20%-Rf)/1.50 = (16%-Rf)/0.60 and solved for Rf and got 13.3% which is correct not onto part B

    It says Assume the securites are correctly priced. Based on the CAPM, What is the expected Return on the market(As a %) (Hint: We can use Rf to find Rm by using the formula [E(Ri)= Rf+Beta X (Rm-Rf)] The answer for Part B is suppose to be (17.8%) but I don't know how they got that any help would be useful.

  • All times are GMT -7. The time now is 01:57 PM.