In the CAPM, a stock has a beta coefficient of 0.1.The average returns to all stocks in the market is 10%.If the interest rate on three-month T-bills is at around 2 percent, what is the expected return to this stock? Assume that unsystematic risk is zero.
A) 2.5 percent
B) 5.0 percent
C) 7.5 percent
D) 10.0 percent
Correct Answer:
Verified
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