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5. Suppose the overall stock market has an expected return of 7% and a standard deviation of 4 %, while the risk free rate is

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5. Suppose the overall stock market has an expected return of 7% and a standard deviation of 4 %, while the risk free rate is 2 %. (a) Suppose General Electric stock has a beta of .8. What does the CAPM imply is its expected return? (b) What is the lowest possible variance of General Electric stock for which its beta could be .8? 2 (c) Suppose Microsoft stock has standard deviation of 5 %. What possible values of Microsoft's expected returns are consistent with the CAPM being true

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