Suppose that the Treasury bill rate is 7% rather than 5%, as we assumed in Table 12.1, and the expected return on the market is 11%. Use the betas in that table to answer the following questions. b. Recalculate the expected return on the stocks in Table 12.1. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. Suppose now that you continued to assume that the expected return on the market remained at 11%. Now what would be the expected returns on each stock?

Suppose that the Treasury bill rate is 7% rather than 5%, as we assumed in Table 12.1, and the expected return on the market is 11%. Use the betas in that table to answer the following questions. b. Recalculate the expected return on the stocks in Table 12.1. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. Suppose now that you continued to assume that the expected return on the market remained at 11%. Now what would be the expected returns on each stock?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 15P

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