Part athe rate on us treasury securities is 42 and the, Ask an Expert

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Part A.

The rate on US Treasury securities is 4.2% and the expected return on the S&P 500 stock market index is 11.8%. Under the capital asset pricing model, what would be the expected return on a stock with a beta of 0.8? (Show your answer as a decimal to three places, e.g., if the answer is 12.3% input 0.123)

Part B.

If the market risk premium is 11.6 percent and the risk-free rate is 3.8, what is the expected rate of return for a stock with a beta of 1.99 under the Capital Asset Pricing Model (CAPM)? (show your answer in decimal form to four places)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92316757

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