Given a firm beta of 1.4, does CAPM predict a firm expected return higher than the S&P500?
What does a firm's beta measure?
Given a risk-free rate of 1%, the S&P500 rate of return of 5%, and a beta of 1.4, what is the CAPM expected return?
What happens to the CAPM expected return if the beta increases? If the risk-free rate decreases? If the S&P500 expected return increases?