The returns on the market the returns on united fund uf the, Ask an Expert

Economics

Estimation of beta and Market risk premium for United Fund

The returns on the market, the returns on United Fund (UF), the risk-free rate, and the required return on the United Fund are shown below.

Year	Market	UF
2003	-9%	-14%
2004	11%	16%
2005	155	22%
2006	5%	7%
2007	-1%	-2%

r_RF: 7.00%

r_United: 15.00%

Assuming the market is in equilibrium and which beta can be estimated with historical data,

1. Estimate beta of United fund

2. Estimate the market risk premium

3. Illustrate what is the required return on the market, r_M?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M917006

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