46) The capital asset pricing model approach to equity valuation: 52) You have j

Question

46)

The capital asset pricing model approach to equity valuation:

52)

You have just made a $1,500 contribution to your individual retirement account. Assume you earn a rate of return of 8.7 percent and make no additional contributions. How much more will your account be worth when you retire in 25 years than it would be if you waited another 5 years before making this contribution?

53)

You are preparing to make monthly payments of $75, beginning at the end of this month, into an account that pays 6 percent interest compounded monthly. How many payments will you have made when your account balance reaches $10,000

The capital asset pricing model approach to equity valuation:

Explanation / Answer

46.Assumes the reward-to-risk ratio increases as beta increases.

Ke=Rf+beta*(Rm-Rf)

Beta increses return also increases

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