My question is why in question 3 they solve for R_X by taking 4+1.2(9-4) and in the other problem they use 4+1.2(9) why are these different? Is there any different in these questions because I'm really confused.

The risk-free rate is 4% and the market return is 9%. Consider the following two stocks I. Calculate the expected return of stock X and stock Y Solution According to CAPM, Rx=4+1.2(94)=4+6=10% RY=8.5% II. If you invest 60% on stock X and 40% on stock Y, calculate the expected return of the portfolio and the beta of your portfolio. Solution RP=.610+.48.5=9.4%Betap=.61.2+.4.9=1.08 The risk-free rate is 4% and the market risk premium is 9%. Consider the following two stocks I. Calculate the expected return of stock X and stock Y Solution According to CAPM, Rx=4+1.2(9)=4+10.8=14.8% RY=12.1% II. If you invest 60% on stock X and 40% on stock Y, calculate the expected return of the portfolio and the beta of your portfolio. [Ans. 13.72\%; 1.08]