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What would the expected rate of return on stock with a beta

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Reference no: EM132955249

Suppose a rate of return on short-term government securities (perceived to be risk-free) is 5%. Suppose also that the expected rate of return by the market for a portfolio with a beta of 1 is 12%

According to the CAPM:

Problem 1: What is the expected rate of return on te market portfolio?

Problem 2: What would the expected rate of return on a stock with a beta = 0?

Reference no: EM132955249

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