Three possible future returns that will be provided by a stock arc as the following: 10%. 15%.
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Question:
Three possible future returns that will be provided by a stock arc as the following: 10%. 15%. and 20%.
a) If all three possibilities are equally likely. calculate the expected return and standard deviation.
b) Assume that the expected return calculated in part la) is equal to the return required by CAPM. If the risk-free rate is 3% and the return on the market portfolio is 9%. what is the beta of this stock?
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