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  3. 6 suppose the yield on short-term government secur

6 Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%....

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6 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 bets of 1 is 12%. According to the capital asset pricing model (Leave no cells blank - be certain to enter "o" wherever required.) a. What is the expected return on the market portfolio? 10 points Answer is complete and correct. Expected rate of retum b. What would be the expected return on a zero beta stock? Answer is complete and correct. Expected rate of retum 6 Suppose you consider buying a share of stock at a price of $40. The stock is expected to pay a dividend of $3 next year and to sell then for $41. The stock risk has been evaluated at B=-0.5 1. Using the SML, calculate the fair rate of return for a stock with a B - -0.5. Sints Answer is complete but not entirely correct. Fair rate of return 16 c-2. Calculate the expected rate of return, using the expected price and dividend for next year. Answer is complete but not entirely correct. Expected rate of retum 10

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