(CAPM). (20 points). Solve the following CAPM problem:   …

  (CAPM). (20 points). Solve the following CAPM problem:                        What is the expected rate of return on a stock where the current rate on Treasury Bills is 4.0%, the expected return on the Market is 9.0%, and the stock’s beta is 0.85? What would the expected rate of return on the same stock be if the market risk premium was 7.5%?