Stock A has a beta of 0.5, and investors expect it to return 5%. Stock B has a beta of 1.5, and investors expect it to return 13%. Use the CAPM to calculate the market risk premium and the expected rate of return on the market.

Market risk premium=8%

Expected market return=9%

Explanation:

Stock A

Expected return of A=Risk free rate+ Beta(Expected market return-Risk free rate)

In the given question:

Expected return of A=5%

Beta=0.5

5%=Risk free rate+0.50((Expected market return-Risk free rate)

Let say

Risk free rate=C

Expected market return=D

5%=C+0.50(D-A)

A=5%-0.50(D-A)

A=5%-0.50D+0.50C

0.50C+0.50D=5%(1)

Stock B

Expected return of B=Risk free rate+ Beta(Expected market return-Risk free rate)

In the given question:

Expected return of B=13%

Beta=1.5

13%=Risk free rate+1.50((Expected market return-Risk free rate)

Let say

Risk free rate=C

Expected market return=D

13%=C+1.50(D-C)

C=13%-1.50(D-C)

C=13%-1.50D+1.50C

1.50D-1.50C+C=13%

1.50D-0.50C=13%(2)

Adding equation I AND 2

0.50C+0.50D+(1.50D-0.50C)=13%+5%

0.50C+0.50D+1.50D-0.50C=18%

2D=18%

D=18/2=9%

D=9%=Expected market return

Putting the value of D in equation 2 to find value of C

0.50C+0.50D=5%

0.50C+0.50*9%=5%

0.50C=0.5%

C=1%=Risk free rate

Market risk premium=Expected market return-Risk free rate

                                 =9%-1%

                                 =8%

$2.00 for three shots.

someone i feel is a leader in my life id have to say would be my mother because she has give me great advice in life and got me out of tough situations. some characteristics she has are creativity, honesty, commitment, respect for others, and communication. one example of a situation when she demonstrated leadership was when i was working late on homework and i started to get stressed and got upset, she asked me if i needed some , and she me with my work. she demonstrated communication and commitment.

i don't know if this is exactly what your looking for but i hope this !