Question: Expected return on Apple (AAPL) stock for 1 year can be calculated using the CAPM model. To get the market return, we consider the S&P500

Expected return on Apple (AAPL) stock for 1 year can be calculated using the CAPM model. To get the market return, we consider the S&P500 index = R(m). Lets assume that 1 year average return on S&P 500 = R(m) = 15%. A Risk Free Rate (for example, Savings Account at ING Direct) = R(f) = 2%. In addition, we assume that the Beta coefficient of Apple stock = = 1.2. What is the expected return on the Apple stock, R(R_j) in this case?

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