If an investment with a beta of 06 offers an expected

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Beta and NPV Analysis. The risk-free rate is 5 percent and the expected return on the market portfolio is 13 percent. On the basis of the CAPM, answer the following questions: (a) What is the risk premium on the market? (b) What is the required rate of return on an investment with a beta equal to 1.2? (c) If an investment with a beta of 0.6 offers an expected return of 8.5 percent, does it have a positive NPV? (d ) If the market expects a return of 12.5 percent from stock A, what is its beta?

Reference no: EM13573760

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