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Suppose the yield on short-term government securities perceived to be risk-free) is about 6%. Suppose also that the expected retum required by the market for
Suppose the yield on short-term government securities perceived to be risk-free) is about 6%. Suppose also that the expected retum required by the market for a portfolio with a beta of 1 is 16.0%. According to the capital asset pricing model a. What is the expected return on the maricet portfolio? (Round your answer to 1 decimal place.) Expected rate of ratum 14.0% b. What would be the expected return on a zero beta stock? Expected rate of ratum Suppose you consider buying a share of stock at a price of $65. The stock is expected to pay a dividend of $8 next year and to sell then for $68. The stock risk has been evaluated at = -0.5. c.1. Using the SML, calculate the fair rate of return for a stock with a B = -0.5. (Round your answer to 1 decimal place.) Fair rate of retum 8.0 c-2. Calculate the expected rate of return, using the expected price and dividend for next year. (Round your answer to 2 decimal places.) Expected role of rolum 2.00
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