(Answered) Assume that the market has an expected return of 57 and

Management Studies

Assume that the market has an expected return of 5.7% and volatility (risk or standard deviation) of 38%. Suppose the CAPM accurately describes the data you are using. If Hewlett-Packard (HP) has a 62.0% correlation with the market and a 25% volatility when the risk-free rate is 2.5%:

(a) What is the covariance between HP and the market?

(b) What is HP's beta?

(d) What percent of HP's total risk (variance) is idiosyncratic?

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