What is united healthcare corporate beta

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Question - Suppose that you are an investor and you currently hold a well-diversified portfolio of stocks. Suppose you are considering in investing in United Healthcare. United Healthcare's stand-alone risk is s = 0.05 and the correlation coefficient between United and the well-diversified portfolio is r=0.5. The well-diversified portfolio's average rate of return is 8% at it stand-alone risk is s = 0.02 (with r=1). The riskless rate of return is 2%.

a. What is United Healthcare's corporate beta? Interpret your result.

b. According to the CAPM model, what is the required rate of return for United Healthcare? Interpret your result.

Reference no: EM132954768

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