Assume that the beta for IBM is 1.15. Also assume that RF is 5 percent and that
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Assume that the beta for IBM is 1.15. Also assume that RF is 5 percent and that the expected return on the market is 12 percent. The required return for IBM can be calculated as
KIBM = 0.05 + 1.15(0.12 - 0.05)
= 13.05%
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the required return using CAPM is KIBM Rf BIBM RM Rf where KIBM is the required re...View the full answer
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Related Book For
Investments Analysis And Management
ISBN: 9781118975589
13th Edition
Authors: Charles P. Jones, Gerald R. Jensen
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