Estimated equation provide evidence in support

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Reference no: EM1319182

Q1. If a firm's production function takes the form F(L, K) = L + 2K also it faces wage rate, w=3 also rental rate on capital, r=4 Illustrate what is LTC(220, 3, 4)?

Q2. A financial analyst estimated the CAPM relation for stock i also obtained the following: R, - Rf = -0.03 + 1.05(R ‘, - Rf ) where R, is the rate of return on the stock, Rf is the risk-free rate also R1I1 is the rate of return on the market portfolio. The standard error of the intercept was 0.01 while the standard error of the slope coefficient was 0.05. Does the estimated equation provide evidence in support of the CAPM for stock i? Justify your answer.

Reference no: EM1319182

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