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Suppose that the correlation coefficient between the returns of IBM and the market was 0.78, the standard deviation of returns of IBM was 32%, the

  1. Suppose that the correlation coefficient between the returns of IBM and the market was 0.78, the standard deviation of returns of IBM was 32%, the standard deviation of the market was 20%, the risk free rate was 2%, and the expected return on the market was 8%.

  1. What is your estimate of IBM's beta given the information above?

  1. What is IBMs expected rate of return according to the CAPM?

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