Question: Problem 12-17 CAPM and Expected Return (LO2) The following table shows betas for several companies. Calculate each stocks expected rate of return using the CAPM.

Problem 12-17 CAPM and Expected Return (LO2)

The following table shows betas for several companies. Calculate each stocks expected rate of return using the CAPM. Assume the risk-free rate of interest is 6%. Use a 8% risk premium for the market portfolio. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Problem 12-17 CAPM and Expected Return (LO2) The following table shows betas

Beta Cost of Capital % 1.66 Company Caterpillar Apple Johnson & Johnson 1.30 % 0.49 % Consolidated Edison 0.21 %

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