The table below gives the amount invested and betas for three stocks.
Stock Amount Invested Beta
GM K10, 000 1.2
IBM K10, 000 1.0
WMT K20, 000 0.7
- Using the CAPM, if the expected return for the market is 6% and the risk-free rate is 1.5%, what is the expected return for each stock?
- What is the beta for this portfolio based on the invested amounts?
- Using the CAPM, what is the expected return for this portfolio?
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