Draw the security market line for each of the following conditions: a. (1) RFR = 0.08; RM(proxy)

Question:

Draw the security market line for each of the following conditions:

a. (1) RFR = 0.08; RM(proxy) = 0.12

(2) Rz = 0.06; RM(true) = 0.15

b. Rader Tire has the following results for the last six periods. Calculate and compare the betas using each index.

Draw the security market line for each of the following

c. If the current period return for the market is 12 percent and for Rader Tire it is 11 percent, are superior results being obtained for either indexbeta?

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Investment Analysis and Portfolio Management

ISBN: 978-0538482387

10th Edition

Authors: Frank K. Reilly, Keith C. Brown

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Question Posted: Dec 17, 2014 10:37 AM

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Draw the security market line for each of the following conditions: a. (1) RFR = 0.08; RM(proxy)

Question:

RATES OF RETURN Proxy Specific Index Rader Tire True General Index Period 29 12 -12 17 20 12 10 15 13 -8 18 28 14 25 -10 0

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Investment Analysis and Portfolio Management

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