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What is the expected return of a stock

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Suppose the market portfolio has an expected return of 10% and a standard deviation of returns of 25%. The risk-free rate is 5%. Assume that the CAPM holds.

a) What is the expected return of a stock that has a beta of 2?

If a stock has an expected return of 15% and a standard deviation of returns of 70%, what fraction of the stock's variance represents idiosyncratic risk?

Reference no: EM132694654

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