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The Treasury bill rate is 4.1%, and the expected return on the market portfolio is 10.7%. Use the capital asset pricing model.
a. What is the risk premium on the market? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
Risk premium %
b. What is the required return on an investment with a beta of 1.4? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Required return %
c. If an investment with a beta of .46 offers an expected return of 8.3%, does it have a positive NPV?
No
Yes
d. If the market expects a return of 11.0% from stock X, what is its beta? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Beta
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