An investor starts with the initial wealth of $500, borrows $400 at the risk-free rate and invest the total (i.e. $900) in stock Pico. This investor's expected return after paying back the loan, is 16%. Suppose that the risk free rate is 1% and that the market expected return is 6%.

 Assuming that CAPM holds, what is the beta of STOCK Pico?

Answer rating: 100% (QA)

To calculate the beta of stock Pico we can use the Capital Asset Pricing Model CAPM formula which re... View the full answer