Question: Here are data on two companies. The T-bill rate is 5.4% and the market risk premium is 8.3%. Company $1 Discount Store Everything $5 Forecast

Here are data on two companies. The T-bill rate is 5.4% and the market risk premium is 8.3%.

Company $1 Discount Store Everything $5
Forecast return 16% 15%
Standard deviation of returns 26% 28%
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 %

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