Problem: The Treasury bill rate is 4 percent, and the expected return on the market portfolio is 12 percent. Using the capital asset pricing model:
a) What is the risk premium on the market?
b) What is the required return on an investment with a beta of 1.5?
c) If an investment with a beta of 8. offers an expected return of 9.8 percent, does it have a positive NPV?
d) If the market expects a return of 11.2 percent from stock X, what is the beta?