What is the expected return on the market portfolio what


25-) Suppose the yield on short-term government securities ( perceived to be risk-free) is about 4%. Suppose also that the expected return required by the market for a portfolio with a beta of 1 is 14%. According to the capital asset pricing model:

a-) What is the expected return on the market portfolio?

b-) What would be the expected return on zero-beta stock?

c-)Suppose you consider buying a share of stock at a price of $30. The stock is expected to pay dividend of $4 next year and to sell then for $31. The stock risk has been evaulated at beta is -.5. Is the stock overpriced or underpriced?

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Financial Management: What is the expected return on the market portfolio what
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