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accidentally selected that answer for question 8, not sure of correct answer. Question 8 1 pts Understanding CAPM and its Security Market Line. If the

accidentally selected that answer for question 8, not sure of correct answer. image text in transcribed
Question 8 1 pts Understanding CAPM and its Security Market Line. If the risk-free rate of R-6%, the return on the market of Rm -11%, and Beta for Stock; = 2.0, what is the expected return of E(R) if investors express an increase in risk aversion that would cause Rm to increase by 4 percentage points, while Re remains unchanged? (Hint: This happened after the 2008 global economic weakening. Very many investors lost so much money they were reluctant to re-invest in stocks. Eventually, stocks rebounded, but many investors missed the rebound opportunities because their level of risk aversion was so high.) 18.7% 10.7% 24.0% 30% O 28.8% Question 9 1 pts Understanding CAPM and beta. Assume the common stock of Starbucks has a beta of 0.61. Also, assume the rate of return on the market is Rm - 11 percent and the risk-free rate of return is R, - 3 percent. According to CAPM, what is the expected return E(R) on the common stock of Starbuck's? 12.45 percent 10.75 percent 22.75 percent 7.88 percent B.60 percent

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