5. Suppose the risk-free return is 3% and you measure the market risk premium to be 6%. CompanyAs beta is 1.3. According to CAPM, what is expected return?

6. If a company has a negative beta of -0.3. How does its expected return compare to the risk-free rate, according to the CAPM (no need to show the exact number, whether or not it will be more or less than the risk-free rate)? Does your result make sense?

7. Pfizer has a beta of 0.9, whereas the GAP is 1.2. If the risk free rate is 3% and market risk premium is 6%, what is the expected return of an equally weighted portfolio of Pfizer and Gap, according to the CAPM?