[Solved] Stock A has a beta of 1.0 and very high unique risk. If the expected return on the market is 20%, then according to the CAPM the expected return on Stock A will be:

Q.	Stock A has a beta of 1.0 and very high unique risk. If the expected return on the market is 20%, then according to the CAPM the expected return on Stock A will be:
A.	the answer cannot be found without knowing Stock A’s correlation or covariance with the market.
B.	more than 20% because of Stock A’s very high unique risk.
C.	exactly 20%.
D.	the answer cannot be found without knowing the risk-free rate of interest.
Answer» C. exactly 20%.

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