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Examples for CAPM

Examples for CAPM - Example CAPM Given the following data...

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Example: CAPM If your firm has a standard deviation of 12, the market has a standard deviation of 8, the firm’s correlation with the market is 0.6, the risk-free rate is 5% and the market return is 15%, what is the firm’s required return according to the CAPM?
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Unformatted text preview: Example: CAPM Given the following data for a stock: beta = 1.5; risk-free rate = 4%; market rate of return = 12%; and Expected rate of return on the stock = 15%. Then the stock is overpriced, underpriced, or fairly priced?...
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