Manipulating CAPM Use the basic equation for the capital asset pricing model (CAPM) to work each of the following problems.
a. Find the required return for an asset with a beta of 0.90 when the risk-free rate and market return are 8% and 12%, respectively.
b. Find the risk-free rate for a firm with a required return of 15% and a beta of 1.25 when the market return is 14%.
c. Find the market return for an asset with a required return of 16% and a beta of 1.10 when the risk-free rate is 9%.
d. Find the beta for an asset with a required return of 15% when the risk-free rate and market return are 10% and 12.5%, respectively.