Question
There are 4 possible market conditions with the following probabilities and potential returns. - Great: 9% chance of occurrence and a 29% return if this
There are 4 possible market conditions with the following probabilities and potential returns.
- Great: 9% chance of occurrence and a 29% return if this happens;
- Good: 20% chance of occurrence and a 19% return if this happens;
- OK: 41% chance of occurrence and a 12% return if this happens; and
- Bad: 30% chance of occurrence and a -10% return if this happens.
There is a stock that has the following possible returns in the 4 market conditions.
- Great: 45% return
- Good: 18% return
- OK: 12% return
- Bad: -13% return
What is the stocks beta in the Capital Asset Pricing Model?
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