Finance: CAPM, Beta
Need help with these multiple choice questions. Please provide the answer attached only. Need the answer in the next hour.
© BrainMass Inc. brainmass.com October 25, 2018, 9:35 am ad1c9bdddfhttps://brainmass.com/business/finance/finance-capm-beta-579163
Attachments
Solution Summary
The problem set deals with issues under finance: CAPM, beta, and Security Market Line.
Finance: Compute beta using CAPM and give a risk free rate
Q2:
In a small economy the market portfolio is comprised of the following three companies:
Company Shares on Issue Price per share Expected Return
A 200,000 $5.00 8%
B 250,000 $4.00 12%
C 500,000 $2.50 16%
If the capital asset pricing model applies in this market and the risk-free rate is 6%, what is the beta of company C?
Q3:
What is the Beta of an Asset if it is correctly priced by the CAPM and is yielding an expected return of 18% when the risk-free rate is 4% and the expected market return is 12%?