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1. Use the following information to answer the problem below:

Stock Market capitalization Expected Liquidating Dividend Beta
Taggar Transcontinental $800 $920 1.10
Reader Metal $600 $720 1.20
Wyatt oil $1000 $1100 0.80
Nielson Motors $400 $500 1.40
(All amounts are million)

If the risk free rate is 3% and the market risk premium is 5%, then the CAPM'S predicted expected return for Wyatt oil is closest to:
1. 9.5%
2. 7.0%
3. 9.0%
4. 8.5%

 

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