6-6B. (Required rate ofreturn using CAPM) a. Compute afair rate of return for Compaq common stock, which

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6-6B. (Required rate ofreturn using CAPM)

a. Compute afair rate of return for Compaq common stock, which has a 1.5 beta. The riskfree rate is 8 percent and the market portfolio (New York Stock Exchange stocks) has"'an expected return of 16 percent.

b. Why is the rate you computed a fair rate?

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