Explain the theoretical problems of CAPM research

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Reference no: EM131850690

1. How long would it take for you to save an adequate amount for retirement if you deposit $40,000 per year into an account beginning today that pays 11 percent per year if you wish to have a total of $1,000,000 at retirement?

2. Explain the theoretical problems of CAPM research that led to the development of APT.

3. Kappa Corp and Lambda Corp are identical except that Kappa pays a dividend of $5 per share, while Lambda pays no dividend and uses the cash to repurchase stock. Peter Berngarten owns 100 shares of Kappa. How could he raise the same amount of spending money if instead he owned 100 shares of Lambda?

He could sell $500 worth of shares of Lambda each year.

He couldn’t; he could not be sure of the price at which he could sell Lambda stock.

He could sell 5 shares of Lambda each year.

He could borrow against his holding of Lambda stock.

Reference no: EM131850690

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