1 stock a has a beta of 04 and investors expect it to, Ask an Expert

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1. Stock A has a beta of 0.4, and investors expect it to return 8%. Stock B has a beta of 1.6, and investors expect it to return 14%. Use the CAPM to calculate the market risk premium and the expected rate of return on the market. (Enter your answers as a whole percent.)

2. If the expected rate of return on the market portfolio is 12% and T-bills yield 4%, what must be the beta of a stock that investors expect to return 9%? (Round your answer to 4 decimal places.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92852602

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