In 2003, Jerry bought a house. In 2007, Jerry sold the house to Mia.
He made a profit of 20%
In 2012, Mia sold the house for £162 000
She made a loss of 10%
Work out how much Jerry paid for the house in 2003

step-by-step explanation:

mean or average is 40.6

required rate of return = 0.166 = 16.6%

step-by-step explanation:

under the capital asset pricing model (capm), the required or expected rate of return for a particular security or asset is given using the formula:

required rate of return = risk-free rate + beta*(market risk premium)

we are given that;

risk-free rate = 4% = 0.04

beta = 1.4

market risk premium = 9% = 0.09

we simply plug these values into the above formula;

required rate of return = 0.04 + 1.4*(0.09)

required rate of return = 0.04 + 0.126

required rate of return = 0.166 = 16.6%