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Beta Expected Return (%) 16.0 12.9 12.2 11.4 11.3 10.1 10.0 9.8 9.6 U.S. Steel Disney Ford General Electric Monsanto Boeing U
- UNIPUL PULJ ( (0) W uPorn 13. CAPM and Expected Return. Suppose that the Treasury bill rate is 6% rather than the 3% value
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Answer #1

a.

Expected Return based on CAPM is

As T-Bill rate is considered as the risk free rate, change it will change the expected return for each of the stocks. The risk free rate increases hence the expected return on these stocks is also expected to go up.

fix X =$B$23+B2*$B$27 E2 A В C D E Expected Returnl% 1 Beta Expected Return if Risk Free rate changes Expected return if Mark

fx =$B$23+B2*$B$27 Е2 в C D Expected return if Market return changes 1 Beta Expected Return(%) Expected Return if Risk Free r

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