State three of the assumptions underlying the capital asset pricing model (CAPM).
Answer to relevant QuestionsCalculate the missing values for the following five efficient portfolios. The expected return on the market is 8 percent, with a standard deviation of 5 percent, and the risk-free rate is 2percent.Estimate the beta of the following stock: market risk premium = 25 percent, RF = 6 percent, P0 = $10, expected dividend at the end of the year = $2.50, P1 = $12.50. Assume the market is in equilibrium.Determine the beta of QTax based on the following information:• Market expected return is 8 percent; standard deviation is 3 percent• Risk-free rate is 3 percent• Current dividend is $4.50• Dividend growth rate is 5 ...You are valuing the Vancouver Rain-Making Company (VRM) and need to calculate the following:a. Required rate of return b. Price of VRM based on the current dividend of $1.25 and a dividend growth rate of 3 percent.The Health Bracelet Company will need 1,000 kg of copper in one year and is trying to decide between buying the copper on the spot market and using a forward contract. The spot price of copper is $15 per kilogram. The ...
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