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Suppose, the nominal rate of return is 15% and the inflation rate is equal to 19%. Calculate the real average return. 7. Suppose the market

Suppose, the nominal rate of return is 15% and the inflation rate is equal to 19%. Calculate the real average return.
7. Suppose the market premium is 9%, market risk (or volatility) is 30% and the risk-free rate is 3%.

(a) What is the equation of the CAPM? Explain each component.

(b) Suppose a security has a beta of 0.6. According to the CAPM, what is its expected return? Explain.

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