F9 exam June 2012

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August 15, 2012 at 6:05 pm #54154
hlclark
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Hi
I am going through the exam paper and I am struggling on q4. My first question is where did the figure for market return come from when calculating CAPM as it’s not givn in the question?
August 16, 2012 at 10:47 am #104378
John Moffat
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The question does tell you that the risk free rate is 4% and also that the equity risk premium is 5%. This means that the market return is 5% more than the risk free rate.
Hope that helps 🙂
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