Suppose you are examining a stock with a beta of 0.6 at a time when the...
Suppose you are examining a stock with a beta of 0.6 at a time when the market has an expected rate of return of 12%. If the risk free rate of return is 2%, then the capital asset pricing model predicts that the stock return will be closest to
Homework Answers
Return=risk free rate+beta*(market rate-risk free rate)
=2+0.6*(12-2)
which is equal to
=8%
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