Expected Return
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Explain and work in Excel.
Expected return on the market portfolio is 17.7 percent and risk free rate is 4.1 percent.
Edward Jones has a beta of 1.6. Under CAPM
A. What is the expected return on Edward Jones stock
B. If risk free rate decreases to 3 percent, what is the expected return on Edward Jones stock.
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Solution Summary
Formula and calculation for expected return under CAPM is given in solution.
Solution Preview
Please see the calculations as shown below.
Under CAPM the expected return = risk free rate + beta *(expected market ...
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