Question: Assume the CAPM is correct. The expected return on the market is 16%. The expected return on a stock with a beta of 1.2 is

Assume the CAPM is correct. The expected return on the market is 16%. The expected return on a stock with a beta of 1.2 is 18%. Assume that the stock is fairly priced.

What is the expected excess return of a stock with a beta of 0.6?

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