Computation of expected return based on capital asset, Ask an Expert

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Computation of expected return based on capital asset pricing model

White Company stock has a beta of 1.5 and a required return of 15%, while Black Company stock has a beta of 1.0 and a required return of 12%. The standard deviation of returns for White Company is 10% more than the standard deviation for Black Company. The expected return on the market portfolio according to the CAPM is ________.

a. 10%
b. 11%
c. 12%
d. 13%

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