ext Arial 11 BIU A D = I E 11 34 56 Question 4 The current expected return on the Golden Oscar stock is 13%, the riskless rate of interest is 1%, and the return on the market portfolio is 10%. I a. According to CAPM, what is the current beta of Golden Oscar? Expected Return= .13 Riskless rate= .01 Return on market port= .1 E(PV)= rf +B(E(rm) - rf .13=.01 + x*(.1-.01) .13 01 +x":09) x= 1333 b. What will be the beta of this security if the covariance of its rate of retum with the market portfolio return decreases by 50%? c. According to CAPM, what is the new expected return on Golden Oscar? Question 5 Consider the following two mutually exclusive investments: MacBook Air 20 F4 76 2 FB A # 3 $ 4 % 5 * & 7 6 8 9 C V E R T Y U O D F G H J K X C V B N AA