problem 2) what is the minimum expected return require for a stock with a beta of 1.5 to be a good purchase?

1. Assume that the following assets are correctly priced according to the security martie line. Derive the security market line. What is the expected return on an asset with beta of 22 Ri=6% $i = 0.5 R2 = 12% B2 = 1.5 2. Assume the security market line given below. Assume that analysts have estimated s beta on two stocks as follows: Bx = 0.5 and By = 2. What must the expected retur the two securities be in order for them to be a good purchase? R; = 0.04 +0.083; 16.01 3. Assume that over some period, a CAPM was estimated. The results are shown below Assume that over the same period, two mutual funds had the following results: Fund A Actual return = 10% Beta = 0.8 Fund B Actual return 15% Beta What can be said about the fund performance? 1.2 R; = 0.06+0.19B: 4. Consider the CAPM line shown below. What is the excess return of the market ore the risk-free rate? What is the risk-free rate? R; = 0.04 +0.108; 1. Assume that the following assets are correctly priced according to the security martie line. Derive the security market line. What is the expected return on an asset with beta of 22 Ri=6% $i = 0.5 R2 = 12% B2 = 1.5 2. Assume the security market line given below. Assume that analysts have estimated s beta on two stocks as follows: Bx = 0.5 and By = 2. What must the expected retur the two securities be in order for them to be a good purchase? R; = 0.04 +0.083; 16.01 3. Assume that over some period, a CAPM was estimated. The results are shown below Assume that over the same period, two mutual funds had the following results: Fund A Actual return = 10% Beta = 0.8 Fund B Actual return 15% Beta What can be said about the fund performance? 1.2 R; = 0.06+0.19B: 4. Consider the CAPM line shown below. What is the excess return of the market ore the risk-free rate? What is the risk-free rate? R; = 0.04 +0.108