Suppose the risk-free return is 4% and the market portfolio has an expected return of 10% and

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Suppose the risk-free return is 4% and the market portfolio has an expected return of 10% and a volatility of 16%. Merck & Co. (Ticker: MRK) stock has a 20% volatility and a correlation with the market of 0.06.

a. What is Merck’s beta with respect to the market?

b. Under the CAPM assumptions, what is its expected return?

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Corporate Finance

ISBN: 9780132992473

3rd Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Mar 07, 2024 01:00 AM

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Suppose the risk-free return is 4% and the market portfolio has an expected return of 10% and

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Corporate Finance

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