Purchase Solution

Financial Management: The Treasury Bill

Not what you're looking for?

Ask Custom Question

The Treasury bill rate is 4 percent and the expected return on the market portfolio is 12 percent. Using the capital asset pricing model: What is the required return on an investment with a beta of 1.5?

Purchase this Solution
Solution Summary

This solution concisely illustrates how to use the capital asset pricing model, describing all the variables which are associated with this equation. All calculations are provided.

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
Recent Feedback
  • "I've posted a similar question for another course. It's post 657940, and it's a practice problem that I'd like to use for the final exam. Your help will be greatly appreciated. "
  • "thank you!"
  • "Thank you again Jayant. You are super fast. "
  • "Thank you Jayant. You are appreciated. "
  • "Again, thank you Jayant. You are wonderful. "
Purchase this Solution
Free BrainMass Quizzes
Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

View More Free Quizzes
Related BrainMass Solutions

  • Decrease in reserve requirements

    Treasury bill rates----------> reduce Treasury bill rates e. the bank prime rate -------> reduce the bank prime rate Explain your answers.

  • Percival Hygiene Portfolio Combinations Risk and Return

    Let the investment be 62.5 % in Index Fund and the remaining 37.5% in treasury Bill Asset Weights (x) Expected return ( r ) Standard deviation (s) Correlation (rho) A Index Fund 0.625 14% 16% 0 B Treasury Bill 0.375 6% 0% Total 1

  • Returns

    Suppose that over the long run, the risk-premium on stocks relative to Treasury bills has been 7.6 percent in the United States. Suppose also that the current Treasury bill yield is 1.5%, but the historical average return on Treasury bills is 4.1%.

  • Reggie White, Jack the Treasurer, Cash Manager Ken

    (3) Cash Manager Ken just picked up the financial newspaper and is having trouble understanding the jargon. He notices that at a Treasury auction of 13 week treasury bills the lowest price bid for $10,000 bill was 97.569 percent of par.

  • We are currently bidding on Treasury bills and have determined that we must have a 5% return for a $1,000 T-Bill that will mature in one year.

    How much would we be willing to bid on the Treasury bill? If we are bidding on a 13 weeks Treasury bill with a 1% return and a 26 weeks Treasury bill with a 2% return for a $1,000 T-bill, how much would we be willing to bid on the Treasury bills?

  • Cost of equity for American Express

    This risk free rate is the current price yield of a 12-month United States Treasury bill (Bloomberg, 2011). 2. Market risk premium = ?? 3. Beta ?? . the cost of equity for Visa is computed as follows: ??

  • Treasury bill

    Treasury bill A three-month Treasury bill and a six-month bill both sell at a discount of 10 percent. Which offers the higher annual yield?

  • Improving expected rate of return without portfolio risk

    Can he thereby improve his expected rate of return without changing the risk of his portfolio? The Treasury bill yield is 6 percent. The Treasury bill yield is 6 percent.

  • Capital budgeting projects

    If $1,000 is placed in an account earning 8% annually, the balance at the end of seven years will be: b. $1,560. Amount = Principal + Interest =1000+ (1000*8%*7) =$1560 References: 1) Financial Management by I.M.

View More Related Solutions