In regard to the capital asset pricing model, comment on disagreements or debates related to RF (the risk-free rate) and KM (market rate of return).
Answer to relevant QuestionsAre betas of individual stocks necessarily stable (constant) over time? Using the formulas in Appendix 17B, compute a least squares regression equation for problem 12. (Round beta and alpha to two places after the decimal point.) Referring to problem 6, if a new portfolio, no. 11, has a KP value of 13.8 percent and a standard deviation ((P) of 7.1 percent, will it qualify for the efficient frontier? Should an investor who thinks interest rates are going down seek low or high coupon rate bonds? Relate your answer to duration and price sensitivity. As part of your answer to problem 2, you computed the price of the bond [column (4)]. This is the same as the PV of cash flows in column (4). a. Recompute the price of a bond based on a 11 percent discount rate (market rate ...
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