How would use capm to value a risky cash ?ow

Reference no: EM133295075

Assignment:

Question:

1. Discuss how you would use CAPM to value a risky cash ?ow.

2. Discuss how you would use CAPM to evaluate performance of an equity fund given information on its "alpha and "beta". Draw a graph to illustrate your answer.

3. Suppose there are only two stocks in the stock market. Stock A sells for $50 and has 100 shares outstanding. Stock B sells for $100 and has 150 shares outstanding. Assume that there is a risk-free asset. What is the market portfolio in this economy? If the beta of stock A is 1.8, what is the beta of stock B?

Reference no: EM133295075

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