Question: Consider the graph below, and assume the CAPM and SML are valid. If a stock has a Beta of 1.50, its expected return should be

Consider the graph below, and assume the CAPM and SML are

Consider the graph below, and assume the CAPM and SML are valid. If a stock has a Beta of 1.50, its expected return should be %. E(R) SML .18 .17 .16 .15 .14 .13 .12 .11 .10 .09 .08 .07 .06 .05 .04 .03 .02 .01 .00 Beta .25 .50 .75 1.00 1.25 1.50 1.75 2.0 9% 3% 12% 15% 6%

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