Suppose SNAP stock has a beta of 1.45, whereas Walmart stock has a beta of...
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Suppose SNAP stock has a beta of 1.45, whereas Walmart stock has a beta of 0.77. If the risk-free interest rate is 3.9% and the expected return of the market portfolio is 12.4%, according to the CAPM,
a. What is the expected return of SNAP stock?
b. What is the expected return of Walmart stock?
c. What is the beta of a portfolio valued at $1 million that consists of 60% SNAP stock and 40% Walmart stock?
d. What is the expected return of a portfolio that consists of 60% SNAP stock and 40% Walmart stock? (There are two ways to solve this.)
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