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ALM Property stock has a beta of 1.5 and an expected return of 13%. The risk-free rate is 4%. Assume the CAPM is valid. i.

ALM Property stock has a beta of 1.5 and an expected return of 13%.

The risk-free rate is 4%. Assume the CAPM is valid.

i. Determine the market risk premium.

ii. Suppose UCC stock has a beta of 0.6. What is the expected return on the UCC stock?

b. A fund manager of IMD Securities Ltd quoted: 'GC Tech has a very high beta since its stock has traded as high as $253 and as low as its current $64 during this year.' Do you agree with the fund manager? Explain.

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