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    Expected Rate of Return using CAPM

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    1a. If the beta of Amazon.com is 2.2, risk-free rate is 5.5% and the market risk premium is 8%, calculate the expected rate of return for Amazon.com stock:

    A. 15.8%
    B. 14.3%
    C. 35.2%
    D. 23.1%

    1b.If the beta of Exxon Mobil is 0.65, risk-free rate is 4% and the market rate of return is 14%, calculate the expected rate of return from Exxon:
    A. 12.6%
    B. 10.5%
    C. 13.1%
    D. 6.5%

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    https://brainmass.com/economics/risk-analysis/241440

    Solution Preview

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    1a. If the beta of Amazon.com is 2.2, risk-free rate is 5.5% and the market risk premium is 8%, calculate the expected rate of return for Amazon.com stock:

    A. 15.8%
    B. 14.3%
    C. 35.2%
    D. 23.1%

    Answer: D. 23.1%

    ...

    Solution Summary

    Calculates Expected Rate of Return using Capital Asset Pricing Model (CAPM)

    $2.19