The required rate of returns you need in calculating your

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Reference no: EM13385313

The required rate of returns you need in calculating your SML this week is the same required rate of return on your portfolio in week 4. Based on section 8.3 in your textbook, rm is your required rate of return on your portfolio. This will be the required rate of return you calculated using your week 4 excel and that is what you needed to use in your calculations for all of your four stocks. For example, if the required rate of return on your portfolio from week 4 is 25% and the risk free rate is 3% (given). Then the risk premium on all your 4 stocks = 25 – 3 = 22. This will be the same for all of your 4 stocks.
The formula you need to use for your SML is 8-8 on page 273 of your textbook. SML Equation: ri = rRF + (RPm) bi

Reference no: EM13385313

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