CAPM

$7-12.$ Calculate the expected rates of return for the low$-,$ average$-,$ and high$-$risk stocks:

a$.$ Risk$-$free rate $=4\mathrm{.}5$ percent

b$.$ Market risk premium $=12\mathrm{.}5$ percent

c$.$ Low$-$risk beta $=\mathrm{.}5$

d$.$ Average$-$risk beta $=1\mathrm{.}0$

e$.$ High$-$risk beta $=1\mathrm{.}6$