QUESTION 7 =R+b,×(kaR) kA=00675+[50×(012-0675 0.14625or14625% kB=0675+082x(0.12-00675 =0.11055or11055% kc=0675+060×(0.12-00675 =0.099or99% kp=00675+[15×(0.2-00675) =0.127875or127875% QUESTION 8 k =R+b x R =0075+0765(0115-075) =0.1056or10.56% QUESTION 9 If the market return is 12. 8% and the market risk premium is 4.3%, the risk-free rate of return must be8.5%(12.8-43) k,=RF+b,×(km-R) kr=085+[0864×(0043 =0.122152or12.2152% k1=085+[0693×(0043 =0.114799or114799% k:=085+0575×(043) 0.109725or109725%July 2003 QUESTION 7  ( )  ( )  ( )  ( )  ( ) 0.127875 or 12.7875% k 0.0675 1.15 0.12 - 0.0675 0.099 or 9.9% k 0.0675 0.60 0.12 - 0.0675 0.11055 or 11.055% k 0.0675 0.82 0.12 - 0.0675 0.14625 or 14.625% k 0.0675 1.50 0.12 - 0.0675 k R b k - R D C B A j F j m F = = +  = = +  = = +  = = +  = +  QUESTION 8  ( ) ( ) 0.1056 or 10.56% 0.075 0.765 0.115 - 0.075 k j RF b j k m - RF = = + = +  QUESTION 9 If the market return is 12.8% and the market risk premium is 4.3%, the risk-free rate of return must be 8.5% (12.8 – 4.3).  ( )  ( )  ( )  ( ) 0.109725 or 10.9725% k 0.085 0.575 0.043 0.114799 or 11.4799% k 0.085 0.693 0.043 0.122152 or 12.2152% k 0.085 0.864 0.043 k R b k - R E L T j F j m F = = +  = = +  = = +  = + 