Suppose the risk-free return is 7.9% and the market portfolio has an expected return of 11.5% and a standard deviation of 16%. Johnson & Johnson Corporation stock has a beta of 0.77. What is its expected return? The expected return is %. (Round to two decimal places.)

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A: Given that: Accumulated Value (A)=$10000 Principal amount (P)=$100 Interest rate (R)=3.9%=0.039 t=?…

Q: total amount in Fund A and Fund B after 10 years.

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A: SML stands for Security Market Line which reflects the graphical version of CAPM. The more risk a…

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A: An asset that plots above the SML is considered an undervalued asset as it provides a return larger…

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A: Solved using Financial Calculator  N = 10*2 = 20 I/Y = 8/2 = 4 PMT = 6/2 = 3 FV = 100 CPT PV =…

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A: Year Cash flow 0 -15000 1 10000 2 3000 3 3000 4 300 5 300

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A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

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A: Interest rate = 0.07 Future value factor = 4 Compounding =  semi annual

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A: Future Value: It is the future worth of a present sum of amount and is calculated by the product of…

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Q: What is the size of the payments that must be deposited at the beginning of each 6-month period in…

A: Solved using Financial Calculator  N = 20* 2 = 40 I/Y = 8.6/2 = 4.3 FV = 170,000 CPT PMT = -1666.17…

Q: U.S. form 1040 or 1040EZ is the form for an individual tax retum. O True O False

A: Answer -  The IRS 1040 form of Income tax return is one of the official documents that U.S.…

Q: Fifteen $5,000 bonds redeemable at par bearing 8% coupons payable quarterly are sold nine years…

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A: Given: Date Closing price Annual dividend 31-Dec-17 $135.50 $3.60 31-Dec-18 $138.20 $3.65…

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A: Principal amount (P) = $510 Future value required (FV) = $1099.69 Interest rate (r) = 8% Period in…

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Q: Rohit invests $ 1 every year starting from the end of the current year. If his savings earn an…

A: Solved using Financial Calculator  PMT = +/- 1 I/Y = 15 FV = 20 CPT N = 9.92 = 10 years

Q: Suppose that you invested $100 in a bank account that earned an annual rate of return of 10%. How…

A: Deposited amount (PV) is $100 Annual rate of return (r) is 10% Time period(t) is 10 years To Find:…

Q: at is the cash price of the

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Q: A car costing $ 48182 is purchased with a 25% down payment and further payments of X at the…

A: The act in which one person or entity provides funds to another person for defined term and agreed…

Q: Your Answer:

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Q: The quarterly pay

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Q: Consider a $100,000 loan balance (EAD) Suppose a Borrower is in class 5 with a Probability of…

A: Expected Loss Rate = PD * LGD = 0.04% * 50% =0.0002%

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Q: Suppose that you had deposited $125 in a bank account for each of the last 5 years. What annual…

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Q: A car costing $ 48182 is purchased with a 25% down payment and further payments of X at the…

A: The loan refers to the amount provided to a person with the promise of repayment in the future and…

Q: You have S10,000 to invest for 90 days. Current spot rate: $1.32/£. The 90-day forward rate is…

A: Forward rate = [Spot rate  * (1 + domestic interest rate) ]/ (1 + foreign interest rate).

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A: Internal Rate of Return (IRR): It is the rate at which the net present value of an investment or a…

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A: Here, Simple interest = 7.5% Time = 3 years and 8 months Interest amount = P620 To Find: 1. Discount…

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A: Given, Loan borrowed is P150,600 Interest rate is 5.36% compounded annually

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A: a) Sharpe Ratio: Sharpe Ratio is used to measure return earned in excess of the risk-free return per…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.