This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: as the: Answer total return. systematic premium. unsystematic return. market risk premium. The intercept of the security market line is: Answer E(Rm) - Rf 1/(E(Rm) - Rf) Rf - E(Rm) Rf what is the expected return given the following economic scenarios: (Recession Probability = 40%, Return = -25%) (Expansion Probability = 25%, Return = 20%) (Boom Probability = 35%, Return = 45%) ? Answer 10.75% 13.00% 16.00% 17.75% The beta of the risk-free asset is: Answer -1.0 0.0 0.5 1.0 The CAPM (capital asset pricing model) assumes that: Answer all assets can be traded investors are risk-averse investors have homogeneous expectations all of the above...
View Full Document
This note was uploaded on 06/23/2011 for the course BUS 2B taught by Professor Hayle during the Spring '11 term at El Camino.
- Spring '11