Assumptions of the simple CAPM model

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Which of the following are assumptions of the simple CAPM model?

I. Individual trades of investors do not affect a stock's price.?

II. All investors plan for one identical holding period.?

III. All investors analyze securities in the same way and share the same economic view of the world. ?

IV. All investors have the same level of risk aversion.

2. A stock price is currently $50, its expected return 15% and volatility 30%. What is the probability that a 4-month European put option with a strike price of $48 will be exercised?

3. Suppose a firm has a retention ratio of 75 percent, net income of $8 million, and 4 million shares outstanding. What would be the dividend per share paid out on the firm’s stock?

Reference no: EM132041462

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