Question: 7 . The Treasury bill rate is 5 % , the risk premium on the market portfolio is 7 % . Using CAPM answer the

7. The Treasury bill rate is 5%, the risk premium on the market portfolio is 7%. Using CAPM answer the following questions.
(a) If the market expects a return of 15% from a stock, what is its Beta? How can you interpret/explain this value? (3 points)
(b) What should be the expected return of an investment if it has a beta of 0.8?
(3 points)

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