Question: Suppose that the correlation coefficient between the returns of IBM and the market was 0.78, the standard deviation of returns of IBM was 25%,

Suppose that the correlation coefficient between the returns of IBM and the

Suppose that the correlation coefficient between the returns of IBM and the market was 0.78, the standard deviation of returns of IBM was 25%, the standard deviation of the market was 22%, the risk free rate was 4%, and the expected return on the market was 10%. a. What is your estimate of IBM's beta given the information above? b. What is IBM's expected rate of return according to the CAPM?

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