Use the capm to calculate the market risk premium and the


CAPM and Expected Return (LO2)

Stock A has a beta of .2, and investors expect it to return 3%. Stock B has a beta of 1.8, and investors expect it to return 11%. Use the CAPM to calculate the market risk premium and the expected rate of return on the market. (Do not round intermediate calculations. Enter your answers as a whole percent.)

Market risk premium %

Expected market rate of return %

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Financial Management: Use the capm to calculate the market risk premium and the
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