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Finance: CAPM, Beta

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Need help with these multiple choice questions. Please provide the answer attached only. Need the answer in the next hour.

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Solution Summary

The problem set deals with issues under finance: CAPM, beta, and Security Market Line.

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Finance: Compute beta using CAPM and give a risk free rate

In a small economy the market portfolio is comprised of the following three companies:

Company Shares on Issue Price per share Expected Return
A 200,000 $5.00 8%
B 250,000 $4.00 12%
C 500,000 $2.50 16%

If the capital asset pricing model applies in this market and the risk-free rate is 6%, what is the beta of company C?

What is the Beta of an Asset if it is correctly priced by the CAPM and is yielding an expected return of 18% when the risk-free rate is 4% and the expected market return is 12%?

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