C1. (Beta and required return) The riskless return is currently 6%, and Chicago Gear has estimated
the contingent returns given here.
a. Calculate the expected returns on the stock market and on Chicago Gear stock.
b. What is Chicago Gear’s beta?
c. What is Chicago Gear’s required return according to the CAPM?
See the attached file.
The expected returns on the stock market for this case are denoted.