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If the expected rate of return on the market portfolio is 13 percent and the T-bills...

If the expected rate of return on the market portfolio is 13 percent and the T-bills yield is 6 percent, what must be the beta of a stock that investors expect to return 10 percent
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Answer #1
Expected return = risk free rate + Beta( expected return of market - risk free rate)


.10 = .06 + Beta( .13 - .06)
.10 - .06 = Beta( .13-.06)
.04/(.07) = Beta = .5714
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