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Major differences between the cml and the sml

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Reference no: EM132641585

1) What are the two major differences between the CML and the SML? Date Market MCRI

1/1/2018 -0.03726 -0.07309

2/1/2018 -0.02912 0.001421

3/1/2018 0.00806 0.008749

4/1/2018 0.024164 0.044069

5/1/2018 0.002894 -0.011

6/1/2018 0.040474 0.082179

7/1/2018 0.032198 -0.01301

8/1/2018 0.001237 -0.03401

9/1/2018 -0.06417 -0.14697

10/1/2018 0.018851 0.031726

11/1/2018 -0.09338 -0.0465

12/1/2018 0.085039 0.133718

1/1/2019 0.032499 0.014107

2/1/2019 0.013551 0.001596

3/1/2019 0.046197 -0.02801

4/1/2019 -0.06348 0.007964

5/1/2019 0.064381 -0.00674

6/1/2019 0.019873 0.10131

7/1/2019 -0.01641 -0.05715

8/1/2019 0.014892 -0.06061

9/1/2019 0.026691 0.03598

10/1/2019 0.036259 0.0558

11/1/2019 0.024771 0.064693

12/1/2019 0.004472 0.105664

1/1/2020 -0.081 -0.11923

2/1/2020 0.12851 -0.4063

3/1/2020 0.133156 0.187745

4/1/2020 0.04736 0.203959

5/1/2020 0.013155 0.15097

6/1/2020 0.064319 0.061913

7/1/2020 0.073475 0.322465

1) Using the beta you just calculated above, a risk free rate of 0.74%, and a market return of 5.44%, what is the required rate of return for MCRI?

2) The current share price of MCRI is $47.86, it pays no dividend, and the consensus estimated share price in one year is $47.00. What is the estimated return for this stock? 

3) Graph the SML for all betas from -0.50 to 3.00 using a RFR of 0.80% and market risk premium of 5.00%. Be sure to label the axes correctly.

Reference no: EM132641585

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