The Treasury bill rate is 4%, and the expected return on the market portfolio is 12%. Using the capital asset pricing model:
b. What is the risk premium on the market?
c. What is the required return on an investment with a beta of 1.5?
d. If an investment with a beta of .8 offers an expected return of 9.8%, does it have a positive NPV?
e. If the market expects a return of 11.2% from stock X, what is its beta?