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Calculation of fair rate of return by using CAPM

A. Compute a fair rate of return for Intel common stock, which has a 1.2 beta. The risk-free rate is 6 percent, and the market portfolio (New York Stock Exchange stocks) has an expected return of 16 percent.
b. Why is the rate you computed a fair rate?
Please show all calculations, formulas, and details and send it via Word document. Thank you.

Solution Summary

The solution contains the computation of fair rate of retun by using CAPM model and also citing the reasons why the rate of return so computed can be called as fair rate of return.

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