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  3. 2) (20 points) when the return on the market portf

2) (20 points) When the return on the market portfolio goes up by 5%, the...

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Accounting

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2) (20 points) When the return on the market portfolio goes up by 5%, the return on Stock A goes up on average by 8% and when the market portfolio return goes down by 5%, Stock A return goes down by 6%. a) Calculate the beta of this stock. b) Assuming that CAPM holds, calculate the required rate of return on this stock by assigning values for the risk-free rate and the expected return on the market portfolio depending on your own choice. (The use of the same risk-free rate and market return by different students will be treated as a cheat attempt)

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