Suppose you observe the following situation: 1.) Assume these securities are cor

Question

Suppose you observe the following situation:

1.) Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

The risk free rate is 3.32%

Suppose you observe the following situation:

1.) Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

The risk free rate is 3.32%

Explanation / Answer

19= 3.32+[1.80(Rm-3.32)] 15.68= 1.80Rm-5.976 Rm= 12.031%

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