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There is an investment that returned 7.6% while having a 7.4 PE ratio and a risk evaluation of 1. Estimate the return on this investment assuming its 7.4 PE ratio and Risk evaluation of 1. What is the residual compared to the actual 7.6 return?

PE Ratio Risk Return

7.4 1.0 7.6

11.1 1.3 13.0

8.7 1.1 8.9

11.2 1.2 10.9

11.6 1.7 12.1

12.2 1.3 12.8

12.5 1.2 11.3

12.5 1.3 14.1

13.0 1.6 14.8

13.4 1.4 16.7

Financial Management, Finance

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