the Chelle Computer Company. QUESTION 8: As an equity analyst, you have develop the following

CHAPTER 8 QUESTION 6: The following are the historic returns for the Chelle Computer Company Year                                    Chelle Computer                                 General Index 1                                                     37                                                       15 2                                                     9                                                         13 3                                                   -11                                                        14 4                                                     8                                                          -9 5                                                    11                                                        12 6                                                    4                                                          9 Based on this information compute the following. a. The correlation coefficient between Chelle Computer and the General Index. c  The beta for the Chelle Computer Company. QUESTION 8:  As an equity analyst, you have develop the following return forecasts and risk estimates for two different stock mutual funds (Funds T and  Fund U): ————————————————-Forecasted Return———————————-CAPM Beta Fund T                                                           9.0%                                                           1.20 Fund U                                                          10.0                                                              0.80 (a) If the risk-free rate is 3.9 percent and the expected market risk premium (i.e., E(Rm)-RFR) is 6.1 percent, calculate the expected return for each mutual fund according to the CAPM (c)  According to your analyss, are Funds T and U overvalued, undervalued, or properly. QUESTION 10:  Draw the security market line for each of the following conditions: (a) (1) RFR =0.08; Rm (proxy) =0.12 (2) Rz = 0.06; Rm (true) = 0.15 RATES OF RETURN Period                      Rader Tire %                               Proxy Specific Index %                               True General Index 1                                     29                                                      12                                                                   16 2                                     12                                                      10                                                                  13 3                                    -12                                                     -9                                                                    -8 4                                     17                                                      14                                                                   18 5                                     20                                                      25                                                                   28 6                                     -5                                                      -10                                                                    0 (c)  If the current period return for the market is 12 percent and for Rader Tire it is 11 percent, are superior results being obtained for ether index beta?