Question: Continue from the previous question. Consider the following information: Probability of the Rate of return if state occurs state of economy Stock 1 Stock 2

Continue from the previous question. Consider the following information: Probability of

Continue from the previous question. Consider the following information: Probability of the Rate of return if state occurs state of economy Stock 1 Stock 2 Recession 0.2 4% 4% Boom 0.8 11% 4% Based on CAPM calculate Stock 2 beta if risk-free asset expected return is 2% and market risk premium is 5%

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