# An investor starts with the initial wealth of $500, borrows $400 at the risk-free rate and invest

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## Question:

An investor starts with the initial wealth of $500, borrows $400 at the risk-free rate and invest the total (i.e. $900) in stock Pico. This investor's expected return after paying back the loan, is 16%. Suppose that the risk free rate is 1% and that the market expected return is 6%.

Assuming that CAPM holds, what is the beta of STOCK Pico?

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