4. Consider the following information for company XYZ: Probability Market Return 0.10 State 1 2 3...

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4. Consider the following information for company XYZ: Probability Market Return 0.10 State 1 2 3 4 0.30 0.40 0.20 -0.12 0.03 0.10 0.20 Company Return -0.24 0.00 0.15 0.50 Assume that Cov(XYZ, Market)= 1.8408% and that the risk free rate = 3%. Using the CAPM, find XYZ's required rate of return. 4. Consider the following information for company XYZ: Probability Market Return 0.10 State 1 2 3 4 0.30 0.40 0.20 -0.12 0.03 0.10 0.20 Company Return -0.24 0.00 0.15 0.50 Assume that Cov(XYZ, Market)= 1.8408% and that the risk free rate = 3%. Using the CAPM, find XYZ's required rate of return.

Answer rating: 100% (QA)

The Capital Asset Pricing Model CAPM is given by r Rf beta Rm Rf where r required rate of retur... View the full answer