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    Beta and required return

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    The riskless return is currently 6%, and Chicago Gear has estimated the contingent returns given here.

    a. Calculate the expected returns on the stock market and on Chicago Gear stock.

    b. What is Chicago Gear's beta?

    c. What is Chicago Gear's required according to the CAPM?

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    Solution Summary

    This solution provides steps necessary to determine the beta and required return.