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Anita, Inc. is considering the following investments. The current rate on Treasury bills is 5 percent, and the expected return for the market is 12.5

Anita, Inc. is considering the following investments. The current rate on Treasury bills is 5 percent, and the expected return for the market is 12.5 percent. Using the CAPM, what rates of return should Anita require for each individual security?

Stock

Beta

H

0.86

T

1.51

P

0.89

W

1.17

a.The expected rate of return for security H, which has a beta of 0.86, is what%.

b.The expected rate of return for security T, which has a beta of 1.51, is what %.

c.The expected rate of return for security P, which has a beta of 0.89, is what %.

d. The expected rate of return for security W, which has a beta of1.17, is what%.

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