Determine expected return on the market


Problem:

Johnson Paint stock has an expected return of 19% with a beta of 1.7, while Williamson Tire stock has an expected return of 14% with a beta of 1.2. Assume the CAMP is true.

Problem:

Question 1: What is the expected return on the market?

Question 2: What is the risk-free rate?

Question 3: What is the market risk premium?

Note: Show supporting computations in good form.

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Accounting Basics: Determine expected return on the market
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