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Suppose the risk-free rate is 8%. The expected return on the market is 14%. Given this data, answer the following questions:

If a particular stock has a beta of .6, what is its expected return based on the CAPM?

If another stock has an expected return of 20%, what must its beta be?

If a stock has a beta of 1.3 and a current return of 17%, what can you say about the stock’s current price? What direction would you expect the stock price to move?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92813515

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