a. Given the following? holding-period returns, compute the average returns and the standard deviations for the Zemin Corporation and for the market.
b. If? Zemin's beta is 1.54 and the? risk-free rate is 4 ?percent, what would be an expected return for an investor owning? Zemin? ? (Note: Because the preceding returns are based on monthly? data, you will need to annualize the returns to make them comparable with the? risk-free rate. For? simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by? 12.)
c. How does? Zemin's historical average return compare with the return you believe you should expect based on the capital asset pricing model and the? firm's systematic? risk?