Here are data on Afterpay and ZIP shares. Firm Afterpay ZIP Forecast return 11% 9% Standard deviation of returns 14% 12% Market Beta 1.5 1.2 The T-bill rate is 3% and the risk premium on the ASX-200 index as a proxy for the market is 6%. a. Draw the Security Market (SML) line. [Hint: You only need two points to draw the line.] b. What is the expected rate of return for Afterpay, according to the capital asset pricing model (CAPM)?

Here are data on Afterpay and ZIP shares. Firm Afterpay ZIP Forecast return 11% 9% Standard deviation of returns 14% 12% Market Beta 1.5 1.2 The T-bill rate is 3% and the risk premium on the ASX-200 index as a proxy for the market is 6%. a. Draw the Security Market (SML) line. [Hint: You only need two points to draw the line.] b. What is the expected rate of return for Afterpay, according to the capital asset pricing model (CAPM)?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 14P

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