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Suppose that the correlation between a stock returns and a market index returns is .75. Suppose that the variance of the stock returns is 0.0144
Suppose that the correlation between a stock returns and a market index returns is .75. Suppose that the variance of the stock returns is 0.0144 and that of the market index returns is .0225. The risk-free rate is 1.50% and the market risk-premium is 2.25%. What is the expected return of the stock? Express your answers as a percentage. Make sure to write your answers to the nearest 100th decimal points. For example, write 12.45 for 12.45%.
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