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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. 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
accidentally selected that answer for question 8, not sure of correct answer.
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