Consider a stock with the following characteristics:

The standard deviation of its annual returns: $58\mathrm{.}2\%.$

The correlation between the returns of the stock and the market: $0\mathrm{.}47$

If the risk$-$free rate is $5\mathrm{.}4\%,$ expected market return is $8\mathrm{.}8\%,$ and the standard deviation of market returns is $25\mathrm{.}4\%,$ what is this stock's expected return according to the CAPM? Answer in percent showing one decimal place.

Answer rating: 100% (QA)

SOLUTION To calculate the expected return of the stock according to the CAPM we n... View the full answer