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xxx

xxxx is xxxxxxxx average:

xxxxxxxxxxxxxxxxxxx + xxxxxxxxxxxxxxxxxxx

xxxxx xxxx + 0.533 x xxxxxxxxxx +0.7462= xxxx

xxx

xxxx x RFR x xxxxxxx (Rmarket – xxxx

E(R) = the xxxxxxxx rate of xxxxxxx

xxx = xxx xxxx free xxxx

βstock x xxxx xx the xxxxx

xxxxxxx = return of xxx xxxxxx xx a xxxxx

(Rmarket – RFR) x xxx xxxxxx xxxx premium,

=0.0 x xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxx

Using xxx xxxxx formula

Rmarket x return of xxx market xx a whole

xxxxxxxx – RFR) = xxx xxxxxx risk premium,

(Rmarket – xxxxx = xxxx x xxx

= xxxx x 1.2 xxxxxxxxxxxx xxx

xxx

a) find Beta

xxxxx 0.07+ beta( 0.04)= xxxxx xxxx (0.04)= xxxx xx

xx

= xxxxx 1(0.06)= 13%

8.12 xxxxxxx Rrf= 9%, Rm=14% xxx xxxxxx

xx xxxx xx xxx the xxxxxxxx rate of xxxxxx xx stock I x xxx x

xxxx x RFR x

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