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
1 answer:
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 = = 1.5
Formula for CAPM
Expected return = Risk free rate + beta ( market risk premium )
Expected Return = Rf + ( 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%
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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
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
Answer:
Step-by-step explanation: