ACC00716 Finance: Business Case Studies 1 - Assessment 2

2. Risk and return estimates (4 marks):

a. Use CAPM to estimate the expected return for the shares of: i) your case company; and ii) a hypothetical company with a negative beta of -0.20 as at 5 April, 2019. To do this, use the yield to maturity on that date of a 10-year Australian Government bond as a proxy for the risk- free rate, assume the market risk premium is 6% and use the company’s most recent 5 year beta.