Assume that the market is in equilibrium and that stock betas can be estimated with historical data.
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Question:
Assume that the market is in equilibrium and that stock betas can be estimated with historical data. The returns on the market, the returns on United Fund (UF), the risk-free rate, and the required return on the United Fund are shown below. Based on this information, what is the required return on the market, rM?
|Year | Market | UF
2011 | -9% | -14% |
2012 | 11% | 16% |
2013 | 15% | 22% |
2014 | 5% | 7% |
2015 | -1% | -2% |
RF: 7.00% | United: 15.00% |
Related Book For
Financial management theory and practice
ISBN: 978-1439078099
13th edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
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