1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
uysha [10]
3 years ago
14

Assume that expected return of the stock A in Rachel’s portfolio is 13.6% this year. The risk premium on the stocks of the same

industry are 4.8%, betas of these stocks is 1.5 and the inflation rate was 2.7%. Calculate the risk-free rate of return using Capital Market Asset Pricing Model (CAPM).
Mathematics
1 answer:
Leya [2.2K]3 years ago
5 0

Answer:

6.4%

Step-by-step explanation:

Capital asset pricing model measure the expected return on an asset or investment. it is used to make decision for addition of specific investment in a well diversified portfolio.

As per given data

Expected return = 13.8%

Market Risk premium = Mrp = 4.8%

Investment beta = \beta = 1.5

Formula for CAPM

Expected return = Risk free rate + beta ( market risk premium )

Expected Return = Rf + \beta ( Mrp)

As we have the expected return, we need to calculate the the risk free rate.

13.6% = Rf + 1.5 ( 4.8% )

13.6% = Rf + 7.2%

Rf = 13.6% - 7.2%

Rf = 6.4%

You might be interested in
Last year, the average monthly revenue at the Yardley Times newspaper was $93,250. So far
algol [13]

Answer:

$85,790

  • Take 8% of 93,250

93,250×0.08=7,460

  • Subtract 7,460 from 93,250

93,250-7,460=85,790

3 0
2 years ago
The polygon in the diagram is a regular octagon with center A. Find the area of the octagon to the nearest tenth of a foot. A) 2
IRISSAK [1]
Method 1: In order to find out the area of an octagon with a radius of 4 feet, we have to split the whole figure into 8 equal isosceles triangles.
Therefore, 
We will find out the area of one triangle and multiply the area with 8 to, figure out the area of the whole octagon there are 8 similar triangles and all of them will have the same area.

Method 2: From method 1, it would take time as there are too much of calculation, therefore we would go for the shortcut using the formula:

Area = 2√2 × r²

where r<span> is the radius of the octagon.
Substituting the values,
We get:
             </span>Area = 2√2 × 4²
             Area = 2√2 × 16
             Area = 2× 1.41 × 16 
             Area = 2.828 × 16 
            Area = 45.25

Rounded to the nearest tenth:

Area = 45.3 ft²


4 0
2 years ago
Pleaseee help. Oh yeah this has to be 20 characters soooo
valina [46]

It is more than one I think because it becomes -1 over -12 WITHOUT the -power and then add the power and it becomes positive. Make the power positive and it will become negative making it less than 1.

6 0
3 years ago
Read 2 more answers
A scale drawing of a rectangular park had a scale of 1 cm = 100 m.
Brilliant_brown [7]

Answer:

521,400 meters squared

Step-by-step explanation:

With the 1cm = 100m scale

6.6 cm = 660m

7.9 cm = 790m

Area = 660 x 790 = 521,400 meters squared

7 0
2 years ago
5x-1/5=7/3 <br> Find The LCD That would eliminate the fractions
photoshop1234 [79]

Answer:

x=\frac{7}{15}

Step-by-step explanation:

5x-\frac{1}{5} =\frac{7}{3}

5x - \frac{3}{15}  = \frac{35}{15}

5x - \frac{3}{15}  + \frac{3}{15} = \frac{35}{15}  + \frac{3}{15}

5x=\frac{35}{15}

\frac{5x}{5} } =\frac{\frac{35}{15}}{5}

x=\frac{7}{15}

7 0
2 years ago
Other questions:
  • Bonnie will buy up to 200 paper cups for a party. she found a store that sells paper cups in packages of 25. the function c(p)=2
    6·1 answer
  • If the mass of your father is 70kg, what is his weight (N)?
    11·1 answer
  • Tia buys 7 packages of muffins. How many muffins does she buy?
    5·1 answer
  • What is 4 +4=<br> i have 4 appels i want another 4 appels how many would i have all together
    5·2 answers
  • What is the slope for y=2
    13·1 answer
  • Where on a number line is the set of numbers x for which:
    5·1 answer
  • What are two numbers that multiply to the value on top and add to the value on bottom
    11·1 answer
  • Please help me if you can​
    5·1 answer
  • Heather walks From her house to the post office to drop off a lighter than she walks to school how many blocks did she walking a
    14·1 answer
  • Complete the function table
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!