1 Discuss the

potential problems with the implementation of the arbitrage pricing theory.

2 In 2007 and 2008

the return on UK shares was less than the return on UK Government bonds. Why

dont we take the most recent returns for rm rf in the

CAPM rather than the long-term historical average rm rf?

3 Company X has a

CAPM-beta value of 1.3, the risk-free rate of return is 8 per cent and the

historic risk premium for shares over the risk-free rate of return has been 5

per cent. Calculate the return expected on shares in X assuming the CAPM

applies.

Q82;

1

1 Discuss the

potential problems with the implementation of the arbitrage pricing theory.

2 In 2007 and 2008

the return on UK shares was less than the return on UK Government bonds. Why

dont we take the most recent returns for rm rf in the

CAPM rather than the long-term historical average rm rf?

3 Company X has a

CAPM-beta value of 1.3, the risk-free rate of return is 8 per cent and the

historic risk premium for shares over the risk-free rate of return has been 5

per cent. Calculate the return expected on shares in X assuming the CAPM

applies.

Q82;

1 Last year I

bought some shares. The returns have not been as predicted by the CAPM. Is

this sufficient evidence to

reject the CAPM?

2 Share A has a beta

of 2, share B has a beta of 0.5 and C a beta of 1. The riskless rate of

interest is 7 per cent and the

risk premium for the market index has been 5 per

cent. Calculate the expected returns on A, B and C (assuming the

CAPM applies).

3 The risk-free

return is 9 per cent, Company J has a beta of 1.5 and an expected return of 20

per cent. Calculate the risk premium for the market index over the risk-free

rate assuming J is on the security market line.

The price is based on these factors:

Academic level

Number of pages

Urgency

Basic features

- Free title page and bibliography
- Unlimited revisions
- Plagiarism-free guarantee
- Money-back guarantee
- 24/7 support

On-demand options

- Writer’s samples
- Part-by-part delivery
- Overnight delivery
- Copies of used sources
- Expert Proofreading

Paper format

- 275 words per page
- 12 pt Arial/Times New Roman
- Double line spacing
- Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Delivering a high-quality product at a reasonable price is not enough anymore.

That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more