Suppose the market risk premium is 5 and also that the


Suppose the market risk premium is 5% and also that the standard deviation of returns on the market portfolio is 0.19. Further assume that the correlation between the returns on ABX arrick Gold) stock and returns on the market portfolio is -0.10, while the standard deviation of returns on ABX stock is 0.26. Finally assume that the risk-free rate is 4%. Under the CAPM, what is the expected return on ABX stock?

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Financial Management: Suppose the market risk premium is 5 and also that the
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