The expected return for the general market is 12.6 percent, and the risk premium
ID: 2804573 • Letter: T
Question
The expected return for the general market is 12.6 percent, and the risk premium in the market is 6.5 percent. Tasaco, LBM, and Exxos have betas of 0.882, 0.602, and 0.507, respectively. What are the corresponding required rates of return for the three securities? a. Using the CAPM, the corresponding required rate of return for Tasaco is B. Using the CAPM, the corresponding required rate of return for LBM is C. Using the CAPM, the corresponding required rate of return for Exxos is (Round to two decimal places.) The expected return for the general market is 12.6 percent, and the risk premium in the market is 6.5 percent. Tasaco, LBM, and Exxos have betas of 0.882, 0.602, and 0.507, respectively. What are the corresponding required rates of return for the three securities? a. Using the CAPM, the corresponding required rate of return for Tasaco is B. Using the CAPM, the corresponding required rate of return for LBM is C. Using the CAPM, the corresponding required rate of return for Exxos is (Round to two decimal places.) The expected return for the general market is 12.6 percent, and the risk premium in the market is 6.5 percent. Tasaco, LBM, and Exxos have betas of 0.882, 0.602, and 0.507, respectively. What are the corresponding required rates of return for the three securities? a. Using the CAPM, the corresponding required rate of return for Tasaco is B. Using the CAPM, the corresponding required rate of return for LBM is C. Using the CAPM, the corresponding required rate of return for Exxos is (Round to two decimal places.)Explanation / Answer
Tasaco required rate of return
required rate of return
risk free rate+(market risk premium)*beta
6.1+(6.5)*.882
11.833
risk free rate
genral rate of return-risk premium in market
12.6-6.5
6.1
LBM required rate of return
required rate of return
risk free rate+(market risk premium)*beta
6.1+(6.5)*.602
10.013
risk free rate
genral rate of return-risk premium in market
12.6-6.5
6.1
Exxos required rate of return
required rate of return
risk free rate+(market risk premium)*beta
6.1+(6.5)*.507
9.3955
risk free rate
genral rate of return-risk premium in market
12.6-6.5
6.1
Tasaco required rate of return
required rate of return
risk free rate+(market risk premium)*beta
6.1+(6.5)*.882
11.833
risk free rate
genral rate of return-risk premium in market
12.6-6.5
6.1
LBM required rate of return
required rate of return
risk free rate+(market risk premium)*beta
6.1+(6.5)*.602
10.013
risk free rate
genral rate of return-risk premium in market
12.6-6.5
6.1
Exxos required rate of return
required rate of return
risk free rate+(market risk premium)*beta
6.1+(6.5)*.507
9.3955
risk free rate
genral rate of return-risk premium in market
12.6-6.5
6.1
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