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Figuring the CAPM: What must the expected return be?

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A stock has an expected return of 10%, its beta is 0.9, and the risk-free rate is 5%. What must the expected return on the market be?

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Solution Summary

Given the risk-free rate, the beta, the solution calculates the expected return on the market.

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Keep in mind the calculation for a stock's expected return. The Expected return (10%) is essentially equal to the market's risk free ...

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