A firm has a required return of 14.2% and a beta of 1.63. If the risk-free rate is currently 5.4%, what is the expected return to the market? Assume that CAPM is correct.

10.8%

Explanation:

Required rate of return = Risk free rate + Beta x ( Expected rate - Risk free rate )

14.2% = 5.4% + 1.63 x ( market rate - 5.4% )

14.2% - 5.4% = 1.63 x ( market rate - 5.4% )

8.8% / 1.63 = market rate - 5.4%

5.4% = market rate - 5.4%

Market rate = 5.4% + 5.4%

Market rate = 10.8%

Market rate = 10.8%

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

answerattainable;