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- Topic: CAPM pricing question
| Author | Topic: CAPM pricing question |
|---|---|
| PattyC @2016-01-12 19:52:02 |
Hello, was wondering if someone could help me out. In volume 4 reading 51 practice problems - #8 I know the CAPM model to be this- E(Ri)=RFr + B(Rm - RFr) So, for the expected return for Stock A, I am getting E(Ra) = 4% + 0.9(8%-4%) = 7.6% the answer key shows E(Ra)= 11.2% I'm guessing the book isn't wrong, anyone with any suggestions what I am doing wrong?? Thanks |
| zhouerz @2016-01-13 23:19:45 |
Where's the rest of the problem? We can't help you unless you give us the inputs and descriptors.. |
| touchou @2016-02-12 08:47:29 |
you should have 4+(0.9*8) the 8% in the problem is Rm-Rf. you have to pay a lot of attention to terminology, you can t afford loosing point with that. good luck. |
CFA Discussion Topic: CAPM pricing question
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