$($Expected rate of return using CAPM$)$

a$.$ Compute the expected rate of return for Intel common stock, which has a $1\mathrm{.}5$ beta. The risk$-$free rate is $4$ percent and the market portfolio $($composed of New York Stock Exchange stocks$)$ has an expected return of $13$ percent.

b$.$ Why is the rate you computed the expected rate?

a$.$ The expected rate of return for intel common stock is $\%.($Round to one decimal place.$)$

b$.$ Why is the rate you computed the expected rate?

The rate is fair and expected because the CAPM provides a theory of how risk and expected return are connected or traded off in the capital markets. $($Select from the drop$-$down menu.$))$

False

True