Suppose the risk-free return is 2.8% and the market portfolio has an expected return of 6.6% and volatility (measured as standard deviation) of 14%. A stock has an 18% volatility and a correlation with the market of -0.3. Following the CAPM assumptions, calculate and explain the beta and the expected return of the stock.

Answer rating: 100% (QA)

Calculating Beta and Expected Return of the Stock 1 Calculate Beta The CAPM formula for beta is Beta ... View the full answer