Question: Using the Capital Asset Pricing Model (CAPM), what is the expected return for each company? The market risk premium is 5.50% and the risk-free rate

Using the Capital Asset Pricing Model (CAPM), what is the expected return for each company?

The market risk premium is 5.50% and the risk-free rate is 0.04% (using the 3-month T-bill yield as the risk-free proxy).

Beta of company 1: 1.37

Beta of company 2: 0.85

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