1. You run a regression of a stock's excess returns versus a market indexs excess returns and find the following:

2. If the simple CAPM is valid, is the situation below possible? Explain. 3. If the simple CAPM is valid, is the situation below possible? Explain

Standard Stat P-value Lower P-value Upper Lower Star Upper Error 95% 95% Coefficients 0.018 1 .328 95. Intercept R(S&P500) - Tf 0.011 0.206 1.689 6.448 0.093 0.000 -0.003 0.922 0.039 1.734 -0.003 0.922 0.039 1.734 Based on the regression result, you know that the stock has beta of_ Portfolio Expected Return 20% 25 Portfolio Expected Return Standard Deviation 36% 30% 40