Question: 1.According to CAPM, which stock has a higher expected return? 2.You build a portfolio out of the 3 assets by putting 40% in stock A,

1.According to CAPM, which stock has a higher expected return? 2.You

1.According to CAPM, which stock has a higher expected return?

2.You build a portfolio out of the 3 assets by putting 40% in stock A, 30% in stock B, and 30% in stock C. What is the CAPM beta of your portfolio?

3.If the annual risk-free rate is 2% and the expected annual raw return of the market is 8%, what is the expected annual raw return of the portfolio predicted by CAPM?

Three stocks have the following properties: Stock A Stock B Stock 396 296 1.596 Volatility Beta 1 .8 1.5

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