CAPM Model
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A regression was run between Stock B and the market proxy portfolio, the S&P 500. The regression line is defined as: Y = 8.3 + 1.2X. If the risk-free rate is 4 percent, the market risk premium is 6 percent, and the market return on Stock B is 10.5 percent,
(a) graph the security market line (SML) for Stock B.
(b) determine if Stock B is overpriced, under-priced, or in equilibrium with the Capital Asset Pricing Model (CAPM).
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CAPM Model is assessed.
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A regression was run between Stock B and the market proxy portfolio, the S&P 500. The regression line is defined as: Y = 8.3 + 1.2X. If the risk-free rate is 4 percent, the market risk premium is 6 percent, and the market return on Stock B is 10.5 percent,
(a) Graph the security market line (SML) for Stock B.
Slope of line given ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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