Problem:
Johnson Paint stock has an expected return of 19% with a beta of 1.7, while Williamson Tire stock has an expected return of 14% with a beta of 1.2. Assume the CAMP is true.
Problem:
Question 1: What is the expected return on the market?
Question 2: What is the risk-free rate?
Question 3: What is the market risk premium?
Note: Show supporting computations in good form.