Question: The table below shows information for 3 stocks. Security Beta Stock 1 1.9 Stock 2 1.2 Stock 3 0.6 The risk-free rate is 3.5% and

The table below shows information for 3 stocks.

Security Beta

Stock 1 1.9

Stock 2 1.2

Stock 3 0.6

The risk-free rate is 3.5% and the required return for the market portfolio is 10%. Calculate the required return for each stock, using the Capital Asset Pricing Model (CAPM).

Part 1

What is the required return for stock 1?

Part 2

What is the required return for stock 2?

Part 3

What is the required return for stock 3?

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