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1 Stock ABC has beta=2, the risk free rate as given by Treausury bills is 1 percent, the market risk premium is 6 percent. Assume

1 Stock ABC has beta=2, the risk free rate as given by Treausury bills is 1 percent, the market risk premium is 6 percent. Assume treasury bills have a 22 beta of o. 23 24 3. Please calculate the expected return on the 25 market. 26 27 4. Using CAPM, what is the expected return of 28 stock ABC? 29 30 5. What is the expected return of a portfolio that consists of 80% of ABC and 20% of Treasury 31 bills? 32

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