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Capital asset pricing model)Anita, Inc. is considering the following investments. The current rate on Treasury bills is 5 percent, and the expected return for the

Capital asset pricing model)Anita, Inc. is considering the following investments. The current rate on Treasury bills is

5

percent, and the expected return for the market is

14.5

percent. Using the CAPM, what rates of return should Anita require for each individual security?

Stock

Beta

H

0.98

T

1.45

P

0.89

W

1.43

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Part 1

a.The expected rate of return for security H, which has a beta of

0.98,

is

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