Question: Use the following information to answer the questions Security Beta Standard Deviation Expected return S&P 500 Risk-free security Stock A Stock B Stock C 1.0

Use the following information to answer the questions

Security

Beta

Standard Deviation

Expected return

S&P 500

Risk-free security

Stock A

Stock B

Stock C

1.0

0.0

0.6

( )

1.2

20%

0%

15%

30%

25%

8.0%

4.0%

( )%

12.0%

( )%

1. Figure out the market risk premium using S&P 500 and Risk-free security

2.Figure out the expected return for Stock A using CAPM.

3. Figure out the beta for Stock B using CAPM.

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