Homework Answers
3
| As per CAPM |
| expected return = risk-free rate + beta * (expected return on the market - risk-free rate) |
| 12 = 3 + Beta * (9 - 3) |
| Beta = 1.5 |
2
| As per CAPM |
| expected return = risk-free rate + beta * (expected return on the market - risk-free rate) |
| 12 = 3 + 1 * (Market return% - 3) |
| Market return% = 12 |
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