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Common Stock Expected Return Standard Deviation Correlation between stock and the market potfolio A 11% 7% 0.9 B 10% 15% 0.5 C 16% 18% 0.3

Common Stock

Expected Return

Standard Deviation

Correlation between stock and the market potfolio

A

11%

7%

0.9

B

10%

15%

0.5

C

16%

18%

0.3

The standard deviation (S. D.) for the market portfolio is 8%, the risk-free rate is 6%, and the market risk premium is 9.5%. Estimate the beta for each stock and use the CAPM to determine which stocks appear to be attractive investments.. SHOW DETAILED CALCULATIONS.

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