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Business, 16.07.2019 18:30 KennyMckormic

Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. suppose also that the expected return required by the market for a portfolio with a beta of 1 is 7.0%. according to the capital asset pricing model: a. what is the expected return on the market portfolio? (round your answer to 1 decimal place.) b. what would be the expected return on a zero-beta stock? suppose you consider buying a share of stock at a price of $50. the stock is expected to pay a dividend of $5 next year and to sell then for $52. the stock risk has been evaluated at β = –0.5. c-1. using the sml, calculate the fair rate of return for a stock with a β = –0.5. (round your answer to 1 decimal place.) c-2. calculate the expected rate of return, using the expected price and dividend for next year. (round your answer to 2 decimal places.)

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Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. suppo...
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