Complete the table below using CAPM model Case Expected return RF RM Beta A ? % 10% 18% 0.8

Q: Suppose the risk free rate (rfr) = 5%, average market return (rm) = 10%, and the required or…

A: In the given question we have two parts: In the first part we need to calculate the Beta of TNG  In…

Q: Asset A has a reward to risk ratio of.o6 and a beta of 1.2. The risk-free rate is 4%. What is the…

A: Calculate the reward to risk ratio as follows: Reward to risk ratio = (Expected return - risk free…

Q: 4. Given the probability and returns associated with each state, what is the expected return? What…

A: Calculations of expected return and standard deviation: Excel workings:

Q: A-1 BETA COEFFICIENTS AND RATES OF RETURN You are given the following set of data: Historical Rates…

A: Beta of stock is used to measure the risk. It compares the movement of a stock with the movement of…

Q: Compute the expected rate of return on investment i, given the following information: Rf=9%;…

A: The expected rate of return refers to the minimum required rate by the investors for the investment.…

Q: Asset A has an expected return of 22.8% and a beta of 1.8. The expected market return is 14%. What…

A: The risk free rate can be calculated as per the capital asset pricing model.

Q: Asset A has an expected return of 10%. The expected market return is 14% and the risk-free rate is…

A: The calculation is shown: Hence, answer C is the correct option.

Q: Calculate volatility and lower partial moment using the data below. ( , ) Target return is 0% Rate…

A: No. Return Return - mean 6.95 (return - mean)2 1 8.3 1.35 1.82 2 6.8 -0.15 0.02 3 -2.4 -9.35…

Q: Beta Volatility SFT 0.45 20% rd -E egle 0.75 18% 1.05 35% 25% 1.20 m has the most total risk? SE…

A: Risk is Measured by Beta of stock and more Beta the stock is more risky.

Q: Suppose the risk free rate (rfr) = 5%, average market return (rm) = 10%, and the required or…

A: Expected return = Risk free rate + beta * (market return - risk free rate )

Q: What is the Variance of returns for Security XYZ? (no rounding off until the final answer, final…

A: Information OUTCOME PROBABILITY EXPECTED RETURN A 20% 20% B 80% 25%

Q: If E(rX)=0.12 and E(rY)=0.08, what would be the expected rate of return of a portfolio made of 30%…

A: Given the following information: Expected return from investment X = 0.12 Expected return from…

Q: Consider the following investments: Investment Expected return Standard deviation A…

A: Coefficient of Variation = Standard Deviation / Mean Prefer the Investment with lower Coefficient of…

Q: Calculate the required rate of return by using CAPM based on the data below. DATA Risk-free rate =…

A: In this question we need to compute required rate of return by using CAPM: As per Capital Asset…

Q: Compute the expected rate of return on investment i given the followinginformation: Rf = 8%; E(RM) =…

A: Capital asset pricing model formula:

Q: For investment A, the probability of the return being 20.0% is 0.5, 10.0% is 0.4, and -10.0% is 0.1…

A: Probability Return 0.5 20% 0.4 10% 0.1 -10%

Q: Security A has the following probability distribution of returns: Scenario Probability Return     1…

A: Expected return =0.1 x 15+0.8×25+0.1×35 Expected return =1.5+20+3.5=25% Mean return =25%

Q: BETA COEFFICIENTS AND RATES OF RETURN You are given the following set of data: Historical Rates of…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: 20. Assume you have the following table. If you know that the Risk free rate (rf) is 6%, what is the…

A: A ratio that provides information regarding the return of a security to the investor in comparison…

Q: Example 3 ss oont alaft A Following Example 2, consider a porfolio with three assets S1, S2 and S3…

A: Note: This post has three subparts.  The second part contains a reference to an optimal portfolio…

Q: Complete the table below using CAPM model…

A: We need to use CAPM model to find beta. The equation of CAPM is Expected return =RF +β(RM-RF)  Where…

Q: 3. Security A has the following probability distribution of returns: Scenario Probability Return 0.1…

A: Calculation: Formula snip:

Q: rate of return on security X with a beta of 1.25 is equal to:

A: The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and…

Q: If you have a weighted value of 12.8% and a return of 16% what is the probability? a. 10% b. 12% С.…

A: given weighted value = 12.8% return = 16%

Q: Compute Bowling Avenue Inc.'s required rate of return given a beta of.9, risk free rate of 3.25%,…

A: Calculation of required rate of return:Answer:The required rate of return is 8.425%

Q: Required Rate of ReturnSuppose rRF 5 5%, rM 5 10%, and rA 5 12%.a. Calculate Stock A’s beta.b. If…

A: Given information: Risk free rate (rf) is 5% Market return is (rm) is 10% Required rate of return…

Q: 4 A progect has 11:1. and the manket Risk pre mium is 6 0*, a beta of 1'03, the risk free nate is…

A: The beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic…

Q: You have the following information: A B с Market Alpha 2% 3% 0% Beta 1.5 0.5 1 Res. 2.00% 0.90%…

A: Here,

Q: You have the following information: A B с Alpha 1.85% 2% -2.36% 0% Beta 1.36 0.95 1.98 1 Res. 2.00%…

A: The single index model: The single index model expresses the total returns of a portfolio as the…

Q: The future worth gradient factor (FIG, i, N) = (P/G, i, N)(F/P, i, N) %3D O A. True B. False

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: A project has an assigned beta of 1.24, the risk-free rate is 3.8%, and the market rate of return is…

A: In the given question we are required to calculate the project's expected rate of return form the…

Q: Draw the indifference curve in the expected return–standard deviation plane corresponding to a…

A: The mathematical equation for calculating expected return: E(r) =Expected return U= Utility A=…

Q: Assume that Rf = 6 percent and the market risk %3D premium (Km - Rf) is 7.0 percent. Compute Kj for…

A: Given details are : Rf = Risk free rate = 6%  (Km - Rf) = Market risk premium = 7.0% Beta = 1.9 From…

Q: Given the following information, determine the beta coefficient forStock L that is consistent with…

A: Formula to calculate beta value: rL = Rf + beta(Rm - Rf) Where rL is the required return Rf is the…

Q: Use the Hamada equation to calculate the unlevered beta for JABIndustries, assuming the following…

A: Beta is an estimate of risk prevailing in the market. When risk prevailing in the market is measured…

Q: and the market risk premium (kM - KRF) is 2%. OShow your solutions and explain your answe Expected…

A: In this we need to calculate the required rate of return and compare with expected return on stock.

Q: From the following data calculate the information ratio: Risk free rate: 6% Beta:1.3 Market rate:…

A: Information Ratio refers to the ratio which is used to compare the return of the stocks with their…

Q: Compute the required rate of return using the CAPM and the following information: Beta = .85…

A: In given question we need to compute the required rate of return using CAPM approach.

Q: The following results were obtained in a decision problem where payoffs are profits: EVSI EVwithPI…

A: EVSI (Expected Value of sample information)= 612 EV with PI = 4300 Efficiency of Sample Information…

Q: Assume that Rf = 6 percent and the market risk premium (Km - Rf) is 7.0 percent. Compute Kj for the…

A: In this question we require to compute the Kj i.e. expected return.

Q: omplete the table below using CAPM model…

A: CAPM model is the model of calculating the required rate of return of stock on the basis of beta,…

Q: 8A-1 BETA COEFFICIENTS AND RATES OF RETURN You are given the following set of data: Historical Rates…

A: Beta represents the measure of risk of a stock considering the market risk. The beta coefficient…

Q: Q. Market rate of return is 18%, risk-free rate of return 8% and beta is 1.2 1. Calculate the…

A: A model that represents the relationship of the required return and beta of a particular asset is…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.