The rate on six-month T-bills is currently 5%.Andvark Company shares has a beta of 1.69 and a required rate of return of 15.4%.According to CAPM, determine the return on the market portfolio.

Question

Quizplus · Accepted Answer

The Capital Asset Pricing Model (CAPM) formula is: Required Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate). Plugging in the given values: 15.4% = 5% + 1.69 * (Market Return - 5%). Solving for Market Return gives approximately 11.15%.

The Rate on Six-Month T-Bills Is Currently 5