ACCT 201 Lecture Notes - Lecture 4: Capital Asset Pricing Model, Managerial Finance, Capital Asset
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Cpa question #1: for each of the cases shown in the following table, use the capital asset pricing model (capm) to find the required return: The formula utilized is: rj = rf + [ j x (rm rf)] Rj = 8 + [0. 90(12-8)] = 11. 6: find the risk-free rate for a firm with a required return of 15% and a beta of 1. 25 when the market return is 14%. To check your answer, the answer is 10. 00%. [(15 (1. 25x14)) / (1 1. 25)] = 10: find the market return for an asset with a required return of 16% and a beta of college algebra! To answer this question, we need to rearrange our formula. Don"t you love rm = {rj [rf x (1 bj)] / bj. {16 [9 x (1 1. 1)] / 1. 1 = 15. 36% To check your work, the answer is 15. 36%.
