2.

Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 11%. A stock has an expected rate of return of 7%. What is its beta? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Beta If the simple CAPM is valid, is the situation shown below possible? Portfolio Risk-free Market A Expected Return 5% 17% 15% Beta 0 1.4 1.7 Possible Not possible