What must the risk-free rate be using capm

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Problem A) Using CAPM. Dannevirke Imports Ltd shares have an expected return of10.2% and a beta of 0.91 and the expected return on the market is 10.8%. What must the risk-free rate be?

Problem B) Reward-to-risk Ratios. Y Ltd shares have a beta of 1.2 and an expected return of 11.4%. Shares in Z Ltd have a beta of 0.80 and an expected return of 8%. If the risk-free rate is 2.5% and the market risk premium is 7%, are these shares correctly priced?

Reference no: EM132988342

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