Business Finance And Management Analysis

Running head: REPORT 0
BUSINESS FINANCE
JANUARY 11, 2020
STUDENT DETAILS:

REPORT 1
Answer 2:
(a) Calculation of expected return of shares of JBHIFI using CAPM
model -
Expected return of shares
A. Risk free rate 1.13%
B. Market risk premium 7%
C. Beta 0.05
D. CAPM (Risk free rate + beta * market risk
premium) 1.42%
(SML: JBHIFI)
From the above SML graph, it is found that the expected return fluctuates as per the changes in

REPORT 2
beta. It is found that when beta was -0.30, the expected return was -0.97%. It is changed to
1.13% with 0 beta and 1.20% with 0.01 beta. Further, when beta has changed to 0.05, then
expected return has also changed to 1.48%. Moreover, it has also changed to 1.83% with 0.1
beta.
Calculation of expected return of shares of Hi-access (Hypothetical company) using CAPM
model -
Expected return of the shares
A. Risk free rate (10 year Australian Government
Bond) 1.31%
B. Market risk premium 7%
C. Beta -0.30
D. CAPM (Risk free rate + beta*market risk
premium) -0.79%