Intro

Use the required return-beta equation from the CAPM.

Part 1

What is the required return for a stock if the risk-free rate is 4%, beta 0.5 and the required return for the market portfolio is 6%?

Part 2

What is the risk-free rate if beta is 1.1, the required return 6.3% and the required return for the market portfolio is 6%?

Part 3

What is beta if the risk-free rate is 4%, the required return 12% and the required return for the market is 6%?

Part 4

What is the required return for the market if the risk-free rate is 4%, beta 0.5 and the required return 12%?