Question: Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 8.6%. Company $1 Discount Store Everything $5 Forecast

Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 8.6%.

Company $1 Discount Store Everything $5
Forecast return 16% 15%
Standard deviation of returns 27% 29%
Beta 1.3 1

What would be the fair return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal places.)

Company Expected Return
$1 Discount Store %
Everything $5 %

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

L Ltd. buys 550 shares of S Ltd. which is based on 1,000 shares at 5.00 EUR. At the time of acquisition the Retained Earnings account is 1,500.00 EUR. At the beginning of the fiscal year, the opening...

Q:

Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. Company $1 Discount Store Everything $5 Forecasted return 12% 11% Standard deviation of returns 8% 10% Beta...

Q:

Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 8.6%. Company $1 Discount Store Everything $5 Forecast return 16% 15% Standard deviation of returns 27% 29% Beta...

Q:

Here are data on two companies. The T-bill rate is 5.2% and the market risk premium is 8.0%. $1 Discount Store Everything $5 15% 16% 25% 27% Company Forecast return Standard deviation of returns Beta...

Q:

Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. Problem 9-5 Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. $1...

Q:

value: 4.00 points Here are data on two companies. The T-bill rate is 5.4% and the market risk premium is 6.8%. $1 Discount Store Everything $5 Company Forecast return Standard deviation of returns...

Q:

please answer 4-7 please 4. Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. $1 Discount Store Everything $5 Company Forecast return Standard deviation of...

Q:

Here are data on two companies. The T-bill rate is 4.8% and the market risk premium is 5.9%. $1 Discount Store Everything $5 Company Forecast return Standard deviation of returns Beta 12% 12% 1.6 11%...

Q:

Please show all work. Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. $1 Discount Store Everything $5 Company Forecast return Standard deviation of returns...

Q:

Here are data on two companies. The T-bill rate is 4.0% and the market risk premium is 8.0%. $1 Discount Store Everything $5 ompany Forecast return Standard deviation of returns Beta 15% 19% 14% 21%...

Q:

Here are data on two companies. The T-bill rate is 3.5% and the market risk premium is 6.5%. $1 Discount Store Everything $5 11% Company Forecast return 12% Standard deviation of returns 8% 10% Beta...

Q:

Matt has been told by his instructor that dividends reduce retained earnings (and therefore stockholders equity). However, since he knows that stockholders are receiving the dividend, Matt doesnt...

Q:

You have built a long-short bond, portfolio consisting of $6.8M long a long-term bond and $2.6M short a medium-term bond. (These are market values.) The long-term bond has duration D1=15.7 and the...

Q:

What kind of student loan repayment options requires that, if married, both partners report their income to verify their financial circumstances?

Q:

SIMAD UNIVERSITY Class: BACC25 Subject: Islamic Accounting Instructions: a) Follow The Instructions. Midterm Exam Instructor: All Ibrahim Date: 6-4-2022 b) You Have 1.5 Hrs. To Complete This Test. c)...

Q:

outline some of the current issues facing HR managers

Q:

demonstrate how human resource management can make a difference by adding value to an organisation

Q:

outline the range of activities with which practitioners of human resource management are likely to be involved