Question: Risk and return estimates (4 marks): Use CAPM to estimate the expected return for the shares of: i) your case company; and ii) a hypothetical

Risk and return estimates (4 marks): Use CAPM to estimate the

Risk and return estimates (4 marks):
1. Use CAPM to estimate the expected return for the shares of: i) your case company; and ii) a hypothetical company with a negative beta of -0.30 as at 6 December, 2019. To do this, use the yield to maturity on that date of a 10-year Australian Government bond as a proxy for the risk-free rate, assume the market risk premium is 7% and use the companys most recent 5 year beta.
2. Using the data from part 2a, estimate portfolio expected return and beta, assuming a portfolio made up of your case company and the hypothetical company in equal weighting.

JB HiFi(JBH) $32.9 $7,095.3 16.14% 4.62%, semi-annually Instalment per month ($'000s) Annual total revenue ($millions) Annual growth in total revenue Loan A (APR compounding frequency) Loan B (APR compounding frequency) Loan C (APR compounding frequency) Property cost Z year bond annual coupon rate 7 year bond current price 5 year bond required rate of return 4.52%, quarterly 4.24%, daily3 $691,000 5.85% $99.95 4.85% JB HiFi(JBH) $32.9 $7,095.3 16.14% 4.62%, semi-annually Instalment per month ($'000s) Annual total revenue ($millions) Annual growth in total revenue Loan A (APR compounding frequency) Loan B (APR compounding frequency) Loan C (APR compounding frequency) Property cost Z year bond annual coupon rate 7 year bond current price 5 year bond required rate of return 4.52%, quarterly 4.24%, daily3 $691,000 5.85% $99.95 4.85%

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