Anita, Inc. is considering the following investments. The current rate on Treasury bills is 4.5 percent, and

Question:

Anita, Inc. is considering the following investments. The current rate on Treasury bills is 4.5 percent, and the expected return for the market is 11 percent. Using the CAPM, what rates of return should Anita require for each individual security?

Stock Beta

H .......0.75

T ....... 1.4

P .......0.95

W .......1.25

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...