Capital asset pricing mode Levine Manufacturing Inc. is considering several inve

Question

Capital asset pricing mode Levine Manufacturing Inc. is considering several investments in the popup window: The rate on Treasury bills is currently 5.5 percent, and the expected return for the market is 13.5 percent. What should investment (using the C a. Using the CAPM, the required rate of return for security A is b. Using the CAPM, the required rate of return for security Bis c. Using the CAPM, the required rate of return for security is d. Using the CAPM, the required rate of return for security Dis % (Round to two decimal places.) % Round to two decimal places. %. Round to two decimal places. % Round to two decimal places.

Explanation / Answer

a CAPM Return on security A 19.02% 5.5%+1.69*(13.5%-5.5%) b CAPM Return on security B 13.66% 5.5%+1.02*(13.5%-5.5%) c CAPM Return on security C 10.46% 5.5%+0.62*(13.5%-5.5%) d CAPM Return on security D 15.74% 5.5%+1.28*(13.5%-5.5%)

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