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Assume that the CAPM holds. One stock has an expected return of 7% and a beta of 0.3. Another stock has an expected return of

  1. Assume that the CAPM holds. One stock has an expected return of 7% and a beta of 0.3. Another stock has an expected return of 12% and a beta of 1.5. What is the return-to-risk ratio that CAPM assumes equal across all individual stocks?
  2. Assume that the CAPM holds. One stock has an expected return of 10% and a beta of 0.6. Another stock has an expected return of 14% and a beta of 1.5. What is the expected return on the market?

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