If the risk-free rate is expected to be 4.5 percent for the coming period, and if the best guess of the market's return is its historical average, then what is the best estimate of Security J's required rate of return for the coming period, assuming the CAPM is correct?

 

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Ex Post Observations Market Security J Return Retur 1 -5.7% -10.6% 2 12.0% 25.5% 3 10.1% 15.2% 4 20.7% 22.8% 5 17.9% 26.3% Ex Post Observations Market Security J Return Retur 1 -5.7% -10.6% 2 12.0% 25.5% 3 10.1% 15.2% 4 20.7% 22.8% 5 17.9% 26.3%

Answer rating: 100% (QA)

We can use the CAPM formula to estimate Security Js required rate of return Required return riskfree ... View the full answer