Mr. Mark, an analyst wants to analyse a companys stock worth Rs.500 per share. The stock has been 25% more volatile than the market, in last few years. The risk-free rate of Economy at Good Bank is 4.2% p.a. and the market is expected to rise by 5% p.a. in coming period.

a. Calculate the Expected Returns if Mark uses the Capital Asset Pricing Model ? b. In your opinion, is the CAPM reliable for forecasting returns for Mr. Mark? Give reasons with your Justifications of CAPM c. Being, Risk Free Rate is mostly < Growth Rate,

What would have happened to the Expected Returns of Mr. Mark if,

i. Risk free rate = Growth Rate ii. As a hypothetical situation, Risk free rate > Growth rate

a. Calculate the Expected Returns if Mark uses the CAPM