Assuming the capital asset pricing model capm holds

Assignment Help Corporate Finance
Reference no: EM13380561

Assuming the Capital Asset Pricing Model (CAPM) holds, calculate the expected returns and the risk premia of the following two portfolios.

1. Portfolio 1 has a beta of 1.5; the return on the market portfolio Rm is expected to be 8% and the riskfree rate Rf is 1%.

2. Portfolio 2: the estimated correlation coefficient between the returns on Portfolio 2 and the market portfolio returns is 0.1, the standard deviation of the market portfolio returns is 3%, and the standard deviation of the returns of Portfolio 2 is 8%; the values of Rm and Rf are as for Portfolio 1.

Reference no: EM13380561

Questions Cloud

Fauver enterprises declard a 4 for 1 stock split last year : fauver enterprises declard a 4 for 1 stock split last year andthis year its dividend is 1.10 per share. this total
You have pound10000 and are offered two investment products : you have pound10000 and are offered two investment products by a fund manager. the first product is a portfolio that
Question 1compute the price of an american call option with : question 1compute the price of an american call option with strikek110and maturityt.25years.question 2compute the price
1 andersons bank requires a compensating balance of 3 : 1. andersons bank requires a compensating balance of 3 million. how much additional funds can be freed up for
Assuming the capital asset pricing model capm holds : assuming the capital asset pricing model capm holds calculate the expected returns and the risk premia of the following
Over the past three years year 1 to year 3 the stocks of : over the past three years year 1 to year 3 the stocks of two companies one plc and two plc generated annual returns to
A zero coupon bond with 100 face value is redeemable at par : a zero coupon bond with 100 face value is redeemable at par in exactly four years. you see from financial times that
1 calculate the annualized forward premium or discount on : 1. calculate the annualized forward premium or discount on six-month forward yen.2. if you are planning to go to japan
An exchange rate is currently 08000 the volatility of the : an exchange rate is currently 0.8000. the volatility of the exchange rate is quoted as 12 and interest rates in the two

Reviews

Write a Review

Corporate Finance Questions & Answers

  Calculation of adjusted return on assets and after tax cost

calculation of adjusted return on assets and after tax cost of debtall questions relate to the kimberly-clark corp.

  Effect of capital structure on companies value per

effect of capital structure on companies value per share.after-tax cash flows payback npv pi irr fabulous fashions is

  What costs are relevant to decision making

What costs are relevant to decision making and how do managers overcome the natural tendency to consider historical and sunk costs when evaluating business alternatives?

  1 there is a stock which grows at 200 per year for 1 years

1. there is a stock which grows at 200 per year for 1 years and after that it grows negatively at 1 per year forever.

  Compute yield-to-maturity for portfolio of securities

The overall package of "Old Greek Bonds" currently trade in financial markets at 12.5% of its total face value. Compute the yield-to-maturity for this portfolio of securities.

  Compute the average duration of board service

The term of office for Federal Reserve Board of Governors is fourteen years. Determine how long does a member actually serve and also compute the average duration of Board service for these two twenty-year periods:

  Calculate the monthly car payments

You are planning buying a new, $15,000 car, & you have $2,000 to put toward a down payment. If you can negotiate a nominal yearly interest rate of 10% & finance the car over 60 months,

  What are the implications of market efficiency

What is Market Efficiency and what are the implications of Market Efficiency, in a global capital market, for a manager for the pricing of securities and investing corporations' money?

  Calculate the irr of this joint-venture

Would it be possible to calculate the IRR of this joint-venture? What are the possible problems, if any, with its calculation in this specific problem?

  Calcin jacobs is a widower who recently retired after a

calcin jacobs is a widower who recently retired after a long career with a major midwestern manufacturer. beginning as

  Evaluate what amount would he have to deposit

Evaluate what amount would he have to deposit if he decides to make one lump-sum payment in September 2012.

  What arguments would make for allowing insurers to set rates

what arguments would you make for allowing insurers to set their own rates and be regulated by market or competitive forces. what arguments would you make for continuing regulatory approval of insurance rates.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd