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1 . You have closely observed stock market returns over the last year, and believe that the annualexpected return of the market portfolio is 1

1. You have closely observed stock market returns over the last year, and believe that the annualexpected return of the market portfolio is 13%. The risk-free rate is 5%, and you own a share of stock in a manufacturer of chemicals, Hawkins Labs Inc., which you believe has an expected return of 16.2%. If the stock market (i.e., the market portfolio) actually ends up going down by 10% this year, by how much would you expect your share of stock in Hawkins labs to go up or down?

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