Question: The beta for Sprouts stocks is 2 . 0 2 . Assume a risk - free rate of 5 % . Assume the S&P 5

The beta for Sprouts stocks is 2.02. Assume a risk-free rate of 5%. Assume the S&P 500 portfolio (market) has a return of 12% and a standard deviation of 25%. Face value for bonds is $1000.
a. Use the CAPM to estimate the required return for the selected stock.
b. You want a portfolio beta of .8. How much will you invest in the market portfolio and how much in the sprouts stock?

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