You are a junior treasury analyst at the Palantine Corporation. The treasurer believes the CAPM gives a

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You are a junior treasury analyst at the Palantine Corporation. The treasurer believes the CAPM gives a good estimate of the company’s return to equity investors at any time, and has asked you to prepare an estimate of that return using the SML. Treasury bills currently yield 6%, but may go up or down by 1%. The S&P 500 shows a return of 10% but may vary from that figure up to 12%. Palantine’s beta is .8. Construct a table showing all possible values of kPalantine for 1% increments of kRF and kM (nine entries). For this problem treat kM and kRF separately. That is, do not assume an increase in kM when kRF changes


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