Return for the government bond

Assignment Help Financial Management

Reference no: EM131220961

TASK 1

CAPM Model=

Required rate of return= risk free+ (market return- t=risk free rate) * Beta

From the following data

https://libertystreeteconomics.newyorkfed.org/2015/04/please-read-this-before-betting-against-government-bond-betas.html#.VtB59dB-6zc

Beta for 10year bond = 0.16

The return for the government bond is

From the following data the 10years bond interest rate 1.77%

https://www.bloomberg.com/markets/rates-bonds

Using CAPM

Required rate of return = 1.77 %+( 6%-1.77%)*0.16

Require rate of return= 1.77%+0.6768%

= 2.4468%

I have used the data for 10 years since the projects period is 10 years

Reference no: EM131220961

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