Question: Help. I tried solving the following two problems and my answers are incorrect. On problem 7.01, I got 70.54 which is incorrect and on 7.14,
Help. I tried solving the following two problems and my answers are incorrect. On problem 7.01, I got 70.54 which is incorrect and on 7.14, I got 8.0 which is also incorrect. Can you pleases show how to arrive at the correct answer?
Sample Test Problem 7.01
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Given the following information from Cullumber Corporation, what price would the CAPM predict that the company's stock will trade for one year from today? (Do not round intermediate calculations. Round final answer to 2 decimal places, e.g. 50.75.)
Risk free rate:3.6%Market risk premium:8.6%Beta:0.65Current stock price:$64.60Annual dividend:$1.84
Price$
Problem 7.14 a1-a2
Assume the expected return on the market is 6 percent and the risk-free rate is 4 percent.
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What is the expected return for a stock with a beta equal to 2.00? (Round answers to 2 decimal places, e.g. 15.25.)
Expected return
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