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Problem 14 Intro A stock has a beta of 1.3. The market risk premium is 8% and the risk-free rate is 4% rAttempt 1/5 for
Problem 14 Intro A stock has a beta of 1.3. The market risk premium is 8% and the risk-free rate is 4% rAttempt 1/5 for 8 pts. Part 1 What is the expected return for the stock according to the CAPM? 3+ decimals Submit Problem 18 Intro We know the following expected returns for stock A and the market portfolio, given different states of the economy: State (s) Probability E(rA,S) E(rM,S) Recession 0.3 -0.03 0.01 Normal 0.5 0.12 O.04 Expansion 0.2 0.2 0.08 The risk-free rate is 0.02 r Attempt 1/5 for 12 pts. Part 1 Assuming the CAPM holds, what is the beta for stock A? 2+ decimals Submit
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