Suppose the risk-free return is 3.5% and the market portfolio has an expected return of 11.9% and a volatility of 12.9% Merck & Co. (Ticker: MRK) stock has a 20.8% volatility and a correlation with the market of 0.065. a. What is Merck's beta with respect to the market? b. Under the CAPM assumptions, what is its expected return?

Suppose the risk-free return is 3.5% and the market portfolio has an expected return of 11.9% and a volatility of 12.9% Merck & Co. (Ticker: MRK) stock has a 20.8% volatility and a correlation with the market of 0.065. a. What is Merck's beta with respect to the market? b. Under the CAPM assumptions, what is its expected return?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 12MC

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