Question

9-2 Assume that Exxon is priced in equilibrium. Its expected return next year is 14 percent, and its beta is 1.1. The risk-free rate is 6 percent. a. Calculate the slope of the SML. b. Calculate the expected return on the market Gluen the followina iniwari 9-3

Answer 1

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ke - Microsoft Excel (Product Activation Failed) Review File Home Insert Page Layout Formulas Data View Add-Ins Σ AutoSum - Cut AC Wrap Text Calibri 11 General ECopy Fill Merge & Center Paste в IU* +.0 .00 Conditional Format Cell Insert Delete Format Sort & Find & Filter Select % .00 0 Format Painter Clear Formatting as Table Styles Number Clipboard Font Alignment Styles Cells Editing fox GD41 GG GI GL GN GC GD GE GF GH GJ GK GM GO GP GQ 25 26 27 Rf+ beta(Rm-Rf) 28 a EXPECTED RETURN = 6%+1.1 (Rm-Rf) 14%= 29 1.1 (Rm-Rf) 8%= 30 31 7.2727%= Rm-Rf 32 Rm-Rf 33 SLOPE OF SML = MARKET RISK PREMIUM SLOPE OF SML = 7.27% [ROUNDED TO 2 DECIMALS] 34 35 36 b Rm-Rf = 7.27% Rm-6%= 37 7.27% 38 Rm 1.27% 39 EXPECTED RETURN ON MARKET = Rm = 1.27% 40 41 42 YIELD bond portfolio RESI e CONVEXITY DGM beta LEASING PV, FV, ANNUITY DIR right clean КE САРМ cap stru WACC E 130% KE CAPM UTILITY, SHARPE, beta port future INDEX INTL CAP BUD Rea erences: AG470 XУ WA 02:18 1ENG 29-10-2019