Question: (Using the CAPM to find expected returns) a. Compute the expected rate of return for the shares of Rumi Plc, which has a beta of

(Using the CAPM to find expected returns)

a. Compute the expected rate of return for the shares of Rumi Plc, which has a beta of 1.46. The risk-free rate is 4 percent, and the market portfolio (composed of London Stock Exchange listed shares) has an expected return of 10 percent.

b. Why is the rate you computed the expected rate?

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