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Problem 1 [2pts] According to the CAPM, what is the expected return of the stock with the standard deviation of the returns of 60% and
Problem 1 [2pts] According to the CAPM, what is the expected return of the stock with the standard deviation of the returns of 60% and the correlation between its returns and the market returns is 02? The market's expected return and standard deviation are 7% and 20%, respectively. The risk-free rate is 2%. Problem 2 The risk-free rate is 2% and the market risk pren inn is 5%. Below table shows the return characteristics of three stockS A, B, and C: Stock Forecasted return (FR) 0.8 1.2 1.1 4.00% 9.00% 7.50% a. 3pts] According to the CAPM, what would be the fair return for each stock? b. 3pts Characterize each stock as underpriced, overpriced, or properly priced
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