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Your investment portfolio consists of $150,000 invested in only one stock Charles . Suppose the risk free rate is 3%. The Charles stock has an
Your investment portfolio consists of $150,000 invested in only one stock Charles. Suppose the risk free rate is 3%. The Charles stock has an expected return of 12%, and a volatility of 40%, and the market portfolio has an expected return of 10% and volatility of 18%. (Now what if you had the stomach for the kind of volatility Charles has.) Under the CAPM assumptions, what would be the expected return you should then earn?
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