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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 Preview

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

    Solution Summary

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