Angel Simmons

Question $5,$ B$8-11($book$/$static$)$

HW Score: $16\mathrm{.}67\%,1\mathrm{.}83$ of $11$ points

Part $1$ of $7$

Points: $0$ of $1$

$($CAPM and expected returns$)$

a$.$ Given the following holding$-$period returns, $,$ compute the average returns and the standard deviations for the Zemin Corporation and for the market

b$.$ If Zemin's beta is $1\mathrm{.}54$ and the risk$-$free rate is $4$ percent, what would be an expected return for an investor owning Zemin? $($Note: Because the preceding returns are base monthly data, you will need to annualize the returns to make them comparable with the risk$-$free rate. For simplicity, you can convert from monthly to yearly returns by multipl average monthly returns by $12.)$

c$.$ How does Zemin's historical average return compare with the return you believe you should expect based on the capital asset pricing model and the firm's systematic risk

Data table

$\backslash$table$[[$Month$,$Zemin Corp.,Market$],[1,6\%,4\%$