The Treasury bill rate is 4.9%, and the expected return on the market portfolio Is 11.1%. Use the capital asset pricing model. b. What is the risk premlum on the market? (Enter your answer as a percent rounded to 1 decimal place.) c. What is the requlred return on an Investment with a beta of 1.2? (Enter your answer as a percent rounded to 2 decimal places.) d. If an Investment with a beta of 0.46 offers an expected return of 8.7%, does It have a positive NPV? e. If the market expects a return of 12.2% from stock X, what is its beta? (Round your answer to 2 decimal places.) b. Risk premium % Required return Does it have a positive NPV? C. % d. e. Beta

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 12P
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The Treasury bill rate Is 4.9%, and the expected return on the market portfolio is 11.1%. Use the capital asset pricing model.
b. What is the risk premlum on the market? (Enter your answer as a percent rounded to 1 decimal place.)
c. What is the requlred return on an Investment with a beta of 1.2? (Enter your answer as a percent rounded to 2 decimal places.)
If an Investment with a beta of 0.46 offers an expected return of 8.7%, does it have a positive NPV?
e. If the market expects a return of 12.2% from stock X, what is its beta? (Round your answer to 2 decimal places.)
b.
Risk premium
%
C.
Required return
%
d.
Does it have a positive NPV?
e.
Beta
Transcribed Image Text:The Treasury bill rate Is 4.9%, and the expected return on the market portfolio is 11.1%. Use the capital asset pricing model. b. What is the risk premlum on the market? (Enter your answer as a percent rounded to 1 decimal place.) c. What is the requlred return on an Investment with a beta of 1.2? (Enter your answer as a percent rounded to 2 decimal places.) If an Investment with a beta of 0.46 offers an expected return of 8.7%, does it have a positive NPV? e. If the market expects a return of 12.2% from stock X, what is its beta? (Round your answer to 2 decimal places.) b. Risk premium % C. Required return % d. Does it have a positive NPV? e. Beta
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